Ethiopia, Italy Sign €80 Million Financing Deal to Bolster Economic Reforms, Climate Resilience
Addis Ababa, June 29, 2026 (FMC) — Ethiopia and Italy have signed an €80 million financing agreement aimed at supporting Ethiopia’s ongoing economic reform agenda, strengthening macroeconomic stability, and accelerating climate-resilient development.
The financing package was signed in Addis Ababa by Finance Minister Ahmed Shide and Italian Ambassador to Ethiopia Sem Fabrizi.
Valued at €80 million, the package comprises a €70 million concessional budget support loan from the Italian Revolving Fund for Development Cooperation (FRCS) and a €10 million grant from the Italian Climate Fund.
The financing is intended to support Ethiopia’s reform agenda under the World Bank-backed Third Development Policy Operation (DPO3), which focuses on maintaining macroeconomic stability, encouraging private sector-led growth, and enhancing the country’s resilience to economic and climate-related shocks.
The agreement also forms part of the broader 2026–2028 financial cooperation program announced by Italian Prime Minister Giorgia Meloni and Ethiopian Prime Minister Abiy Ahmed following their meeting in July 2025 and reaffirmed during the second Italy–Africa Summit in February 2026. The newly signed package marks the first phase of Italy’s planned support of up to €150 million for Ethiopia’s reform program.
According to the Ministry of Finance, the financing will help advance Ethiopia’s Homegrown Economic Reform Program and the country’s Ten-Year Development Plan by strengthening fiscal sustainability, improving public financial management, promoting private investment, and supporting inclusive economic growth.
Priority sectors under the program include energy, agriculture, and water resources. Planned reforms seek to expand electricity access, boost agricultural productivity and market systems, and improve water resource management, with the objective of enhancing livelihoods, particularly in rural and climate-vulnerable communities.
The concessional loan is also expected to provide additional fiscal space for implementing reforms, cushioning the impact of external economic shocks, and preserving macroeconomic stability. Meanwhile, the climate grant will support reforms related to renewable energy, climate finance, and carbon markets as Ethiopia advances its transition toward a greener and more climate-resilient economy.
The Ministry of Finance said implementation of the financing package will be carried out through Ethiopia’s national systems, supported by monitoring, reporting, and independent audit mechanisms to ensure transparency and accountability, while remaining aligned with the World Bank’s policy framework.
Speaking during the signing ceremony, Finance Minister Ahmed Shide described the agreement as timely support for Ethiopia’s reform agenda, saying it would strengthen the government’s capacity to sustain key structural and climate-related reforms while creating additional fiscal space.
Italian Ambassador Sem Fabrizi said the financing package reflects Italy’s continued commitment to supporting Ethiopia’s sustainable and inclusive development, describing it as both a financial partnership and a reaffirmation of cooperation between the two countries.
The agreement marks another step in the long-standing development partnership between Ethiopia and Italy as both countries seek to deepen cooperation in support of inclusive growth, economic resilience, and sustainable development.