IMF Projects Increase in Ethiopia's Reserve Cover

The International Monetary Fund (IMF) projects that Ethiopia's foreign exchange reserve cover will reach 2.7 months of imports in the 2025/26 fiscal year, an increase from 2.2 months in the previous year. However, the report highlights that a weaker Ethiopian Birr increases the local-currency cost required to service foreign-currency debt.

In its July assessment, the IMF indicated that Ethiopia could lower its risk of debt distress to a moderate level by the end of its current program, contingent on the completion of necessary restructuring and financing steps. The IMF has not yet announced a revised assessment of these projections in light of the most recent security developments in the country.