Ethiopia's Economic Crisis: IMF and World Bank Express Concerns
Published Sept. 19, 2025, 9:07 a.m. by FNN
The economic situation in Ethiopia has become a priority issue for the International Monetary Fund (IMF) and the World Bank. On September 19, 2025, local sources reported these two major financial institutions expressing grave concerns about the state of the country's economy. The Prosperity Party (PP) government in Ethiopia is reportedly in a financial crisis, attributed to the large amount of money borrowed from the World Bank and the IMF. The funds, intended to aid poorer countries, are believed to have been diverted to procure weapons and other military resources. This has reportedly led to increased hardship for the Oromo people, who have allegedly been subjected to oppressive measures by the forces of Prime Minister Abiy Ahmed. The country's financial crisis and inability to repay its debts have resulted in a lower credit rating for Ethiopia, making it more difficult to secure additional loans. The country has been in a fiscal crisis since December 2023, when it defaulted on its Eurobond debt repayment. The ongoing war in Tigray has also contributed to the financial crisis, with significant resources being allocated to military operations. The Ethiopian government's focus on the conflict has reportedly neglected the country's economic development and the welfare of its citizens. This has resulted in a significant decline in the living conditions of the people, especially those in the Oromia region. In light of these circumstances, the IMF and World Bank are reportedly reconsidering their financial support to Ethiopia. In January 2025, the Ethiopian government had discussions with the G20 about debt relief. However, the situation has not significantly improved, and it is projected that by 2027/28, the country will be in a severe financial crisis, according to the IMF's assessment. The Ethiopian government's attempts at economic reform have reportedly been unsuccessful. Our sources indicate that the country is at risk of further economic decline if urgent measures are not taken to address the current crisis. This includes addressing the ongoing conflict and redirecting resources towards economic development and improving the living conditions of the people. The economic crisis in Ethiopia is not a new phenomenon. The country has been grappling with economic challenges since 2011, with previous governments also struggling to manage the situation. The current crisis has been exacerbated by the ongoing conflict, which has diverted resources away from economic development and towards military operations. The PP government's crackdown on the Oromo Liberation Movement has also reportedly contributed to the country's economic decline. The government's focus on sectors such as finance, education, agriculture, healthcare, sports, and tourism has reportedly been compromised, further exacerbating the economic situation. In conclusion, the economic situation in Ethiopia is a cause for concern, with the IMF and World Bank raising serious questions about the country's financial management and future economic prospects. The ongoing conflict and the government's focus on military operations at the expense of economic development and the welfare of its citizens have contributed to the current crisis. There is a pressing need for urgent measures to address the situation and improve the economic conditions in the country.
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