Ethiopia’s designation as “unclassified” in the World Bank’s FY2026 report is not only rare—it places the country among a short list of nations like Venezuela, Somalia (prior to 2020), Eritrea, and North Korea, where prolonged conflict or government suppression has obstructed reliable data collection. The classification reflects a collapse in statistical and institutional transparency, especially troubling given that Ethiopia has received over $11 billion in multilateral assistance since 2018. Despite these funds, the whereabouts and impact of many large-scale budgetary allocations remain unclear. While the World Bank has not publicly declared misuse, the absence of verifiable outcomes and validated gross national income (GNI) data raises major concerns about accountability and donor confidence moving forward.
In FY2023, Ethiopia’s fiscal deficit stood at approximately 1.7% of gross domestic product (GDP), with projections indicating it may widen to over 2.8% by 2025. The country has long relied on a state-led development model, underpinned by large public investments and sustained through external borrowing. While this model delivered impressive growth figures in past decades, the structural foundations have weakened significantly. Foreign exchange shortages, a persistent trade imbalance, high inflation, and a deteriorating export base—especially in sectors like agriculture, textiles, and mining—have eroded economic resilience. The COVID-19 pandemic only intensified these vulnerabilities, triggering capital flight, suppressing remittance inflows, and stalling foreign direct investment. Amid this instability, Ethiopia’s most recent classification by the World Bank as “unclassified” reflects not only data gaps but a deeper concern: the government’s inability to produce reliable and comprehensive gross national income (GNI) data for international review. This unprecedented omission speaks volumes about the current state of Ethiopia’s fiscal governance and transparency of information.
Ethiopia, Africa’s second-most populous country, has experienced dramatic political shifts and economic cycles over the past six decades. From the monarchy era of Emperor Haile Selassie to the military Marxism of Mengistu, the ethnic federalism of the Ethiopian People’s Revolutionary Democratic Front (EPRDF), and the increasingly authoritarian and destructive governance under the Prosperity Party led by Prime Minister Abiy Ahmed, the country’s destiny has been shaped by attacks on civilians, war, debt, ethnic polarization, and, a humanitarian crisis in the Amhara region that has been grossly ignored.
While the Ethiopian People’s Revolutionary Democratic Front (EPRDF) (1991–2018) is often credited with ushering in a period of strong economic growth through centralized planning and the appointment of technically skilled officials, labeling it merely as a “technocratic rise” is deeply misleading. Beneath the surface of development gains was a rigid political structure built on ethnic federalism, formalized through the 1995 constitution, which institutionalized identity-based governance and exacerbated divisions across the country. The EPRDF used surveillance, censorship, and targeted crackdowns in regions such as Gambella, Oromia, Amhara, and the Somali region to maintain control. Most critically, the coalition—dominated by the Tigrayan People’s Liberation Front (TPLF)—embedded into its foundational ideology a narrative that portrayed the Amhara ethnic group as a historic oppressor class. This framing, first laid out in the TPLF’s 1976 manifesto, was disseminated through state institutions, media, and education systems, encouraging many other ethnic groups to view the Amhara as a hegemonic threat to be resisted. This weaponized narrative not only entrenched ethnic mistrust but also laid the groundwork for later outbreaks of targeted violence and exclusion. The centralization of power under the EPRDF masked deep coercive mechanisms that curtailed dissent, denied equitable participation across ethnic lines, and raised serious concerns about the long-term sustainability of its growth model.
Referring to the current era under the Prosperity Party as a period of “turbulent liberalization” likewise fails to capture the scale and nature of the political and humanitarian crisis that has unfolded since 2018. Although Prime Minister Abiy Ahmed initially promised sweeping reforms—including floating the Ethiopian Birr (ETB), liberalizing the telecom sector, and launching Ethiopia’s first stock exchange—these economic gestures were quickly overshadowed by widespread political unrest, ethnic conflict, state-sponsored violence, and the systematic erosion of civic space. Extrajudicial killings, mass arrests of journalists and opposition figures, sweeping internet shutdowns, and opaque executive consolidation have defined much of the Prosperity Party’s rule. While some regions initially welcomed the rhetoric of unity, these promises were quickly undermined by increasing militarization, political purges, and impunity for violence. Allegations of mass atrocities and war crimes have been raised in multiple regions, especially against the Amhara in the Amhara and Oromia regions as well as in Tigray, but definitive assessments remain elusive due to restricted access and the absence of neutral international investigations. What is clear, however, is that repression has intensified, and many observers now describe the Prosperity Party’s governance not as liberalization, but as a deeply authoritarian regime and shamelessly fascistic one, where violence and division are instruments of control rather than obstacles to reform. Just as the Ethiopian People’s Revolutionary Democratic Front (EPRDF) was accused of marginalizing non-Tigrayan ethnic groups, the Oromo-led Prosperity Party has adopted similarly polarizing tactics—removing experienced professionals and replacing them with loyalists primarily from the Prime Minister’s own ethnic base, regardless of their qualifications. This pattern has further eroded institutional competence and entrenched ethnic patronage in the civil service, security forces, and regional governance structures.
Ethiopia’s trajectory of economic governance has historically mirrored the political ideologies of its ruling regimes. Under the late Emperor Haile Selassie (1930–1974), fiscal authority was centralized in the monarchy, and while the Ethiopian Birr (ETB) remained relatively stable through a pegged system, financial transparency and macroeconomic data were largely absent. The Derg regime (1974–1991) brought Marxist command economics, nationalization, and extreme suppression of independent institutions. Currency values were kept artificially stable on paper, but actual economic realities—such as shortages, debt, and black-market activity—were obscured from any serious public or international scrutiny. With the rise of the Ethiopian People’s Revolutionary Democratic Front (EPRDF) in 1991, a new technocratic era emerged, characterized by aggressive infrastructure development and gross domestic product (GDP) growth averaging 9.4% annually. However, this growth occurred within a tightly controlled information environment, where debt figures, foreign reserves, and financial forecasts were carefully curated or delayed to serve political ends.
Despite Ethiopia’s reputation for macro-level growth during earlier decades, microeconomic indicators paint a sobering picture of deteriorating household welfare. From the early 1990s to the mid-2020s, the cost of staple food items such as injera, onions, tomatoes, and peppers has skyrocketed, often outpacing wage increases. As of 2025, a single injera in Addis Ababa can cost over 24 Ethiopian Birr (ETB), compared to under 2 ETB just two decades ago. Price inflation has disproportionately impacted urban low-income households and rural subsistence farmers alike, eroding real purchasing power and triggering food insecurity even in traditionally self-sustaining communities.
Job market dynamics further illustrate this economic strain. Ethiopia’s employment landscape over the past four decades has oscillated between state-dominated hiring, agricultural dependency, and underfunded urban labor markets. According to the International Labour Organization (ILO) and World Bank datasets, youth unemployment rates have remained persistently high, particularly in urban centers, despite large-scale technical education programs. The informal economy now absorbs over 70% of urban labor, reflecting a deep mismatch between education, opportunity, and economic policy.
In an effort to close funding gaps and meet ambitious revenue targets, Prime Minister Abiy Ahmed’s government has launched a sweeping and controversial tax campaign—one that many believe places an unbearable burden on Ethiopia’s working class and war-affected communities. In March 2025, the administration imposed a mandatory tax on all workers and companies, citing the need to replace suspended USAID funding. The revenue was directed to a newly created Disaster Risk Response Fund, though the public has seen little to no transparency on how these funds are being used.
Then, in July 2025, the government passed a major overhaul of the Income Tax Proclamation, introducing reforms that dramatically expanded the tax base and increased burdens on low-income earners. Under the new law, ride-hailing drivers, housekeepers, informal workers, and digital content creators are now taxed, often regardless of whether they earn enough to cover their basic needs. The 10% entry tax rate was eliminated, replaced with a higher 15% starting rate, and a 3% withholding tax was added to everyday goods and services, effectively taxing survival itself.
These sweeping reforms are tied to the government’s attempt to meet a 1.5 trillion birr revenue target under a controversial $11 billion agreement with the International Monetary Fund (IMF). But this deal was never supported by the public. Many Ethiopians explicitly opposed allowing Abiy Ahmed’s administration to borrow from the IMF, warning that the regime lacked the transparency and credibility to manage such funds responsibly. Their fears, it seems, were not unfounded.
In a cruel twist of irony, the very civilians who warned against the IMF deal—fearing it would empower a violent and unaccountable regime—are now the ones forced to fund it. They face higher taxes, shrinking purchasing power, and worsening poverty, while the state they opposed expands its power. Evidence is mounting that IMF-linked funds are being channeled into state violence. Reports suggest the Abiy-led federal government has used these resources to acquire drones, military hardware, and surveillance systems—not for national defense, but to conduct deadly campaigns against civilian populations, particularly against the Amhara in the Amhara and Oromia regions.
This isn’t just a question of fiscal policy—it’s a matter of human survival. Many Ethiopians are now being taxed to fund their own annihilation. Entire communities that have long been targeted by state violence are being further stripped of their livelihoods through regressive tax measures. The result is a perverse system in which international lenders supply the capital, the regime repurposes it for repression, and the people—already displaced, hungry, or under siege—are left to foot the bill.
Much of Ethiopia’s debt burden also stems from borrowing under the Prosperity Party and the Ethiopian People’s Revolutionary Democratic Front (EPRDF)—successive regimes that never sought meaningful public input. Critics argue this fits the definition of odious debt: loans incurred by a government for purposes contrary to the people’s interest, without consent, and used to harm rather than help the population.
Unless the international community reconsiders its role in enabling authoritarian regimes under the guise of economic reform, it will remain complicit in a system where fiscal discipline becomes a weapon, and the poor are not just taxed into poverty, but into silence.
Advocacy organizations like Jubilee Debt Campaign and Global Justice Now have long argued that debt incurred to fund repression or entrench authoritarian power should be canceled, not inherited as generational debt by the very people it was used to harm. Drawing on international precedents—from apartheid-era South Africa to Saddam Hussein’s Iraq—these groups insist there is both a moral and legal basis for challenging illegitimate loans in global forums.
Their demand is clear: enforce independent audits, ensure transparency, and suspend all financing that enables state violence.
Until these measures are taken, the cycle of generational debt will continue, punishing those who never consented and ensuring that the cost of injustice is encumbered by the most vulnerable for decades to come.
African Development Bank. (2023). Ethiopia economic outlook 2023. https://www.afdb.org/en/countries/east-africa/ethiopia/ethiopia-economic-outlook
International Monetary Fund. (2023). Ethiopia country report. https://www.imf.org/en/Countries/ETH
Transparency International. (2024). Corruption Perceptions Index 2023. https://www.transparency.org/en/cpi/2023
World Bank. (2024a). World Development Indicators: Ethiopia. https://data.worldbank.org/country/ethiopia
World Bank. (2024b). World Bank Group COVID-19 response: Ethiopia. https://www.worldbank.org/en/news/feature/2022/02/18
World Bank. (2025). World Bank country and lending groups (FY2026). https://datahelpdesk.worldbank.org/knowledgebase/articles/906519
