Ethiopia: IMF Extended Credit Facility — Program Overview and Progress

As reported by IMF

Summary

• The Ethiopian birr has shown relative stability in the second year of Ethiopia's IMF Extended Credit Facility program, with the official exchange rate holding broadly steady after the sharp depreciation that followed the 2024 flotation.
• The stabilization reflects improved confidence from continued reform implementation, including fiscal consolidation and the elimination of the parallel market premium that had distorted the economy for years.
• Foreign exchange reserves have been gradually rebuilding, helped by stronger remittance inflows and improved export earnings. Diaspora sending money home have benefited from the narrowed gap between official and informal rates, with authorized channels now offering competitive rates.
• For BirrValue users, the stabilization means that rate movements are now more gradual and predictable compared to the volatile period immediately after flotation. Comparing bank rates remains important as individual banks still offer different spreads.
• The IMF program review process continues to provide a framework for policy discipline, and analysts expect monetary policy to remain cautious through 2026 as the central bank prioritizes inflation control alongside exchange rate stability.