“Ethiopia is repeating the IMF mistakes of its neighbors without any of their safeguards”
Zegeye Amare
On the Edge of Collapse
Ethiopia is standing at a dangerous economic precipice. With external debt surpassing $28.5 billion—nearly 47% of its GDP—foreign reserves barely covering a month of imports, and over 30 million citizens requiring humanitarian assistance, the government has chosen to enter into an IMF-backed reform program. But history offers a chilling warning: more than 60% of IMF programs in low-income countries have failed to achieve debt sustainability.
Ghana and Zambia: Warnings from the Recent Past
Ghana and Zambia offer stark case studies. Both countries entered IMF agreements in the past decade. Ghana’s delays in securing debt restructuring agreements stalled disbursements, triggered public unrest, and increased uncertainty. Zambia’s reforms began to gain traction only after it clinched a deal with official creditors under the G20 Common Framework. The lesson is clear: delay is deadly. Ethiopia must immediately initiate transparent, inclusive negotiations with all its creditors—especially China and private bondholders, which together hold 65% of the country’s external debt. Stalling will only further erode investor confidence and deepen fiscal instability.
Burdening the Poor, Protecting the Powerful
More alarming is the government’s handling of fiscal reforms. Instead of tackling inefficiency, illicit capital outflows, or elite wealth hoarding, the burden is being squarely placed on the poor. Regressive tax policies, subsidy removals, and cuts in public services threaten to suffocate a population already living on the edge. Ethiopia, one of the world’s most poverty-prone nations, is now tightening tax enforcement on informal traders and small businesses while offering little in return—no meaningful investment in jobs, no safety net, and no voice for the public in shaping the reforms.
This Is Not Reform—It Is Punishment
In Ghana, subsidy cuts triggered widespread protest. In Zambia, austerity drained education and health budgets. In Ethiopia, the same mistakes are being repeated—but under even more fragile social and political conditions. The state is now seen to be playing politics with poverty, using IMF conditionalities as a shield to justify domestic inaction and economic mismanagement. This is a risky gamble—both economically and politically.
No Accountability, No Credibility
The country’s governance record further compounds the danger. Both Ghana and Zambia suffered setbacks in their IMF programs due to corruption, lack of transparency, and poor institutional performance. Ethiopia has yet to demonstrate a commitment to public audits, open procurement, or SOE reform. Without serious anti-corruption safeguards and parliamentary oversight—as guaranteed under Article 78 of the Ethiopian Constitution—IMF funds risk vanishing into opaque channels, feeding the same elite networks that helped create the crisis.
Devaluation Without Protection Will Fuel Crisis
Meanwhile, exchange rate liberalization looms. While it may be necessary in theory, the risks are enormous. Ethiopia imports more than 75% of its wheat, in addition to most medicines and fuel. A sudden devaluation without foreign exchange buffers or clear monetary coordination could send inflation soaring above 40%, triggering food riots, crushing real wages, and destabilizing urban and rural economies alike.
Excluding the Public Guarantees Failure
Even more dangerous is the absence of public dialogue. Reforms are being discussed behind closed doors, with civil society, business leaders, and citizens shut out of the process. This top-down approach will likely backfire. In Zambia, public resistance delayed critical reforms. In Ghana, reforms collapsed during election season due to lack of buy-in. In Ethiopia—where trust in state institutions is already fragile—failure to engage the public could render reforms politically unsustainable.
No Recovery Without Revenue Generation
The most worrying aspect of all, however, is the government’s refusal to invest in long-term revenue generation. The economy is not going to grow by taxing the poor harder. Ethiopia’s obsession with compliance over creativity, control over coordination, is dragging it toward a slow collapse. The country needs to support small enterprises, invest in productivity, and broaden its tax base through fairness—not desperation.
Beyond Economics: A Question of Legitimacy and Survival
This is not just about economics. It is about legitimacy, justice, and survival.
Ethiopia is repeating the IMF mistakes of its neighbors without any of their safeguards. The public is paying for a crisis it didn’t create, while those who did are still insulated by power, privilege, and opacity. If this continues, the outcome is not reform—it is failure. Social unrest. Economic implosion. State fragility.
The Choice: Passive Collapse or Active Course Correction
Yet failure is not inevitable. Ecuador, in 2021, successfully renegotiated its IMF deal through organized civic pressure. Ethiopia’s people—if informed, united, and vocal—can still demand a path that protects the vulnerable, upholds justice, and builds real sustainability.
The clock is ticking. And the cost of silence may be too high to bear.
Sources
Center for Economic and Policy Research (CEPR), Why IMF Programs Fail: The Case of Low-Income Countries, 2023International Monetary Fund, Ghana 2023 Article IV Consultation and Program Review, 2024
International Monetary Fund, Zambia Staff Report and Program Update, 2023
World Bank, Macroeconomic Update: Ethiopia Country Overview, 2024
Ministry of Finance, Ethiopia, Public Debt Management Report, Q2 2025
Oxfam, Inequality Kills: Global Economic Inequality Report, 2022
African Development Bank, G20 Common Framework Implementation Review, 2024
World Bank Governance Indicators, 2024
Editor’s Note : Views in the article do not necessarily reflect the views of borkena.com
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