Ethiopia is projecting modestly faster economic growth in the next fiscal year, amid rising exports and looming debt talks.
Finance Minister Ahmed Shide told parliament that GDP is expected to expand by 8.9% between July 2025 and July 2026, up from 8.4% this year.
Government spending will rise to 1.9 trillion birr ($14 billion), with a budget deficit of 2.2% of GDP, a slight increase from 2.1%.
Shide highlighted surging export revenues, which reached $7.2 billion over the past 11 months—an increase of 118.2% from last year.
Prime Minister Abiy Ahmed recently credited the rise to booming gold and coffee exports, strengthening Ethiopia’s external earnings.
The IMF’s January forecast projected goods exports at $4.59 billion and services at $7.97 billion for the full fiscal year.
Markets are watching export performance closely, as it could influence the restructuring of Ethiopia’s defaulted $1 billion bond.
Investors argue strong exports indicate a short-term liquidity issue rather than deep insolvency, allowing room to delay repayments.
If insolvency is declared, bondholders may face “haircuts”—losses on their principal—rather than a rescheduling of payments.
Formal negotiations on the bond restructuring are expected in the coming weeks, with IMF findings set to shape the talks.
The outcome will be pivotal for Ethiopia’s economic recovery and for investors betting on the nation’s reform path.