Description
In July 2024 the International Monetary Fund (IMF) approved a $3.4 billion credit arrangement for Ethiopia, conditioned on significant monetary policy reforms. The IMF has long been calling on Ethiopia to abandon its currency peg and remove barriers to foreign private capital participation. These calls were resisted by the developmental regime which governed the country from 1991-2018. However, with the emergence to power of a new Prime Minister in 2018, there has been more acquiescence to these calls, as demonstrated by the Ethiopian government’s decision to float its currency in 2024. The paper provides a historical materialist analysis of indebtedness in Ethiopia, focusing on the 1991-2018 and post-2018 periods. It contrasts the resistance and quasi-compliance that characterized the relationship between the Ethiopian government and creditors between 1991 and 2018 to the post-2018 era of acquiescence. It contends that the post-2018 economic liberalization measures in Ethiopia were driven by external creditors, highlighting how debt is being used as a tool to dismantle the developmental state and pave the way for the entry of private capital into the Ethiopian economy. With special attention to agency, the analysis highlights how debt continues to be used as a tool of capitalist coercion.
