Washington is pushing Ethiopia to accelerate and deepen its macroeconomic reforms, believing that the initial results are encouraging but still insufficient to establish lasting stability and inclusive growth. At the heart of the discussions: fiscal consolidation, foreign exchange market liberalization, tax reform, and improving the business climate to attract more private investment.

High-Level Dialogue Addis Ababa – Washington

In late January 2026, Ethiopian Finance Minister Ahmed Shide held high-level discussions in Addis Ababa with US officials on the status of reforms and prospects for economic cooperation. The discussions focused on the ongoing reform program, investment development, and the overall trajectory of the Ethiopian economy, while the country already benefits from support from the IMF and other multilateral partners.

The United States welcomes the progress made (disinflation, improved exports, and strengthened foreign exchange reserves), while calling for continued—or even intensified—reform efforts to consolidate these initial gains.

Macroeconomic reforms deemed “promising”

The IMF emphasizes that Ethiopia’s macroeconomic performance exceeds program expectations: real growth is projected at around 9.3% in 2025/26, inflation is declining significantly from levels above 30%, and foreign exchange reserves are recovering. Key reforms have been undertaken regarding:

• The foreign exchange market, with limited discretionary interventions and a central role given to currency auctions, paving the way for a genuine interbank market.
• Domestic revenue mobilization, through tax and customs reforms aimed at bringing public revenue to a level compatible with financing needs.
• Debt restructuring and fiscal discipline, to contain the deficit and maintain its sustainability.

These advances represent a positive signal for investors, both for Washington and the IMF, but they must be sustained over time.

What Washington is asking of Addis Ababa

Despite the progress, the United States and international financial institutions are emphasizing several areas requiring attention:

• Continue the liberalization of the exchange rate and reduce distortions between the official and parallel markets to fully restore confidence in the birr.
• Further strengthen fiscal discipline, particularly by controlling spending and aligning the budget with commitments made under the IMF program.
• Accelerate subsidy reforms, especially those on fuel, while protecting social programs and safety nets for vulnerable households.
• Improve the business climate: governance of state-owned enterprises, opening up the financial sector, and a more predictable regulatory framework for the private sector.

For Washington, maintaining a credible reform agenda is essential for the continuation and expansion of financial, technical, and trade support provided to Ethiopia.

Reforms with Mixed Social Impacts

Ethiopian authorities acknowledge that these reforms, often inspired by the Washington Consensus standards, have a significant social cost, particularly in a context of internal insecurity and pressure on purchasing power. The sharp devaluation of the birr, the gradual reduction of certain subsidies, and the increase in taxes are weighing heavily on households and small businesses, fueling an internal debate on the pace and nature of the adjustments.

The challenge for Addis Ababa is therefore to continue stabilizing the macroeconomic framework while strengthening social safety nets and employment policies to ensure that the benefits of growth and reforms are effectively shared.

Underlying this is a geopolitical issue

By pushing Ethiopia toward further macroeconomic reforms, Washington also seeks to strengthen a strategic partner in East Africa, in a fragile regional environment with strong growth potential. An economically stable Ethiopia, capable of attracting American and international investment, is seen as a pillar of regional stability and a counterweight to competing influences.

For Addis Ababa, the challenge is to leverage this interest – American and multilateral – to finance its development, while maintaining sovereign control over the pace, content, and social dimension of its economic reforms.