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East Africa

Ethiopia Registers Growth Despite Inflation and Mounting Debt Burden

June 11, 2025

Ethiopia, one of Africa's fastest-growing economies, remains tied down by debt, inflation, and currency shortages. Last year, Addis Ababa secured a USD 3.4 billion bailout from the International Monetary Fund (IMF) after receiving guarantees for debt relief from major creditors, including China and the Paris Club. In exchange, it agreed to stop propping up its currency and to carry out a 30% devaluation.

(3 Minutes Read)

Ethiopia’s economy has suffered back-to-back blows from COVID-19, a war in the northern region of Tigray, and conflict in Ukraine.

Ethiopia, one of Africa’s fastest-growing economies, remains tied down by debt, inflation, and currency shortages. Last year, Addis Ababa secured a USD 3.4 billion bailout from the International Monetary Fund (IMF) after receiving guarantees for debt relief from major creditors, including China and the Paris Club. In exchange, it agreed to stop propping up its currency and to carry out a 30% devaluation.

That condition has been partly blamed for rampant inflation, which stood at 14.4% in April. As a measure, the central bank has maintained tighter control over the money supply and limited private-sector lending. Ethiopia is also required to open its banking and telecom sectors to foreign investment.

Ethiopia’s economy has suffered back-to-back blows from COVID-19, a war in the northern region of Tigray, and conflict in Ukraine.

With the civil war in Sudan in its third year, the humanitarian situation is worsening, with more than 25 million people experiencing acute food insecurity.