The main challenge facing Ethiopian policymakers will be to harness the recovery in global demand and sustain the rise in domestic demand while avoiding the return of high inflation and other macroeconomic imbalances. Despite concerns about governance and the lack of a functioning opposition, the country's strategic importance means that donors will continue to provide support to help to keep the fiscal and external deficits in check. The Ethiopian government will generally adhere to an IMF-style policy framework-although it will continue to bar foreign banks-in order to uphold donor funding. It performed well under the 14-month, US$235m exogenous shocks facility with the IMF that concluded in November 2010, but a successor IMF programme in 2011-12 is unlikely as the authorities are keen to maintain economic independence.

The government introduced a new five-year economic plan, the Growth and Transformation Plan (GTP), at the end of 2010, which prioritises agriculture, infrastructure and industry (mining, manufacturing and textiles). The government will find it difficult to achieve the GTP's ambitious goals while realising its other aim of reducing dependence on aid and foreign investment. Donors will remain committed to projects in areas such as road transport, energy and information and communications technology, as well as to building capacity in the public sector and developing the private sector.