Ethiopia to redirect up to $543mn in World Bank funding to cushion fuel crisis

Ethiopia plans to redirect up to $543mn from existing World Bank-financed development projects to help cover essential imports and ease financial pressures caused by the Middle East war, Addis Fortune reported on November 8.

The proposed reallocation would draw on previously approved financing rather than new emergency lending. The World Bank confirmed that Ethiopia was not seeking additional emergency credit, according to the newspaper. The timetable for approving and disbursing the redirected funds remains unclear.

At the October 27 foreign-exchange auction rate of ETB159.70 per dollar, the funding would be equivalent to approximately ETB86.7bn.

The move comes as Ethiopia faces higher fuel and fertiliser import costs and pressure on its external financing position. The country relies heavily on imported petroleum products, leaving it exposed to rising international energy prices and disruptions to global supply chains.

World Bank President Ajay Banga said in October that the institution was discussing potential crisis assistance with 30 to 40 countries affected by the Middle East conflict. The Bank had initially made $25bn available in emergency financing, with another $35bn potentially accessible through reallocations from existing development projects, Reuters reported.

Ethiopia has already received additional near-term support through its International Monetary Fund (IMF) programme. On July 1, the IMF approved a $464mn disbursement, including approximately $200mn brought forward from later scheduled payments under the existing $3.4bn Extended Credit Facility to help offset the energy shock.

The government also approved a ETB286bn recapitalisation of the Ethiopian Petroleum Supply Enterprise in June. IMF documents show that ETB170bn was to come from World Bank financing and ETB116bn from the federal budget to settle legacy liabilities and reduce fuel procurement financing costs. It remains unclear whether the proposed $543mn reallocation overlaps with those earlier commitments or involves a separate restructuring of existing World Bank funding.

The IMF has warned that Ethiopia's fuel import bill will remain substantially higher in fiscal 2026/27 than in the previous year, while elevated fertiliser prices will add to external financing pressures. The government has committed to fuel-pricing reforms and targeted assistance for vulnerable households under its economic adjustment programme.