IMF Postpones Ethiopia Review Schedule, Board Decision Slated for Early 2027

The International Monetary Fund (IMF) has scheduled discussions on Ethiopia’s sixth review under its Extended Credit Facility (ECF) arrangement for November, with a final decision from the Fund’s Executive Board expected in early 2027. The schedule pushes the process beyond the previously indicated October 15 milestone.

An IMF spokesperson told The Reporter that November will mark the next round of talks on Ethiopia’s reform programme. However, a formal decision on the sixth review will not occur until early 2027, when the assessment is presented to the Executive Board. The spokesperson did not disclose a firm timetable for either milestone.

The IMF’s fifth-review report, published in July, had previously noted October 15, 2026, as the earliest date for the next disbursement—projected at SDR 154.11 million, down from the originally planned SDR 191.70 million. The spokesperson emphasized that October 15 was merely the earliest window for potential fund distribution rather than a hard deadline for concluding the review, with actual fund releases remaining strictly contingent on Executive Board approval.

The review process requires an IMF mission to travel to Ethiopia to evaluate economic performance and consult with government authorities. The mission then reports its findings to fund headquarters, where the Executive Board determines whether programme conditions have been met to allow subsequent disbursements.

In a separate exchange with The Reporter, Julie Kozack, the IMF’s Director of Communications, noted that the Fund could not yet pin down a completion date, as the mission must first meet with Ethiopian authorities before presenting its assessment to the board.

“What will happen before we conclude the next review is we have a mission, and a team will go to Ethiopia and talk with the authorities. They will come back and present the report to the Executive Board,” Kozack said.

The fifth review, completed on July 1, disbursed approximately USD 464 million and brought cumulative disbursements under the four-year, USD 3.4 billion programme to about USD 2.647 billion. The IMF reported that Ethiopia met all quantitative performance criteria for end-December 2025 and achieved most indicative targets, alongside notable progress in exports, foreign-exchange reserves, and government revenue.

Those results, however, cover an earlier assessment period and do not dictate the outcome of the sixth review, which evaluates Ethiopia’s performance against targets set for the end of June 2026.

Approved in July 2024, the ECF arrangement supports Ethiopia’s broader economic reform agenda, which aims to correct macroeconomic imbalances, strengthen public finances, and foster private-sector-led growth.

Since entering the programme, the government has introduced income tax modifications, stepped up tax compliance and customs administration, liberalized the foreign-exchange market, and gradually reduced fuel subsidies to raise domestic revenue and relieve public finance pressures.

These measures have coincided with a sharp rise in tax collection. Federal tax revenue surged by 76 percent in the first nine months of the 2025/26 fiscal year compared to the same period a year earlier, driven by adjustments to income and fuel taxes, according to IMF data. General-government tax revenue is estimated to have climbed from 6.2 percent of GDP in 2023/24 to 9.5 percent in 2025/26.

During a fiscal policy press briefing on the sidelines of the IMF–World Bank Annual Meetings in Bangkok on Wednesday, The Reporter asked Davide Furceri, a division chief in the IMF’s Fiscal Affairs Department, whether aggressive tax hikes and subsidy cuts are appropriate for Ethiopia given its massive informal sector and structural productivity constraints.

Furceri responded that nations starting from a very low tax-to-GDP base, such as Ethiopia and Nigeria, must mobilize additional domestic revenue to fund essential public spending and service debt.

“For many countries that are starting from a very low tax rate base, like Ethiopia and Nigeria, it is important to raise sufficient revenue,” Furceri said.

Beyond expanding the tax base, Furceri stressed that governments must eliminate structural distortions in their tax systems that hamper economic activity. Addressing these inefficiencies can improve revenue collection without imposing undue burdens on the economy.

He also cautioned against dismissing targeted subsidies simply because a country lacks comprehensive national registries or digital payment systems. While building such infrastructure remains a crucial medium-term priority, governments can deploy alternative strategies immediately.

“Countries need to prepare for this in the medium term. In the short term, there are alternatives, including school-feeding programmes and geographically targeted support,” he said.