Man walks on the outskirts of Addis Ababa
A man walks on the outskirts of Addis Ababa, Ethiopia, November 5, 2021. Reuters

Ethiopia is in talks with the International Monetary Fund (IMF) to borrow at least $2 billion under a reform program, four sources familiar with the matter told Reuters.

The IMF is still working on assessing the country's debt sustainability after a request for a program equivalent to about 500% of the size of its stake in the global lender, the sources said this week on condition of anonymity because the talks are private.

In this first debt analysis, the IMF calculated that Ethiopia is set to face a financing gap of at least $6 billion until 2026, according to two sources close to the negotiations. That would still leave a funding hole of roughly $4 billion over that period should the country succeed in securing the amount under discussion.

Talks are still ongoing in Washington this week during the IMF and World Bank spring meetings. An IMF staff mission visited Addis Ababa from March 27 to April 7.

"The scope of the support for Ethiopia is yet not set in stone, both parts are still working on the debt sustainability analysis," one of the sources said.

An IMF spokesperson did not immediately reply to a request for comment. Ethiopia's State Finance Minister Eyob Tekalign Tolina and central bank chief Mamo Mihretu also did not immediately respond to Reuters' requests for comment.

Africa's second-most populous country in early 2021 requested a broader debt rework under the Group of 20's Common Framework, an initiative for restructuring government debt aimed at low-income countries. But progress has been complicated by a two-year civil war that broke out in November 2020, leading to the deaths of thousands of people and displacing millions more.

International Monetary Fund logo is seen outside the headquarters building
International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. Reuters