The main challenge facing Ethiopian policymakers will be to harness the recovery in global demand and sustain the rise in domestic demand while addressing 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. The Ethiopian government will loosely adhere to an IMF-style policy framework in order to uphold donor funding, although it will continue to bar foreign banks and will maintain its monopoly in the energy and telecommunications sectors. 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 has gradually expanded the role of the state in the economy, and interventionist action will be a feature of public policy over the forecast period, although it could have detrimental economic consequences. A five-year economic plan, the Growth and Transformation Plan (GTP), adopted at the end of 2010, prioritises a strong role for government, and price ceilings on 20 basic goods were introduced in January to combat inflation. This policy will not prove productive; the government has since had to start selling goods itself, as shortages emerged when sellers stopped importing goods because it was not profitable, and inflation has continued to rise regardless. It may eventually have to relax these price ceilings or at least stop enforcing them. The sometimes conflicting agendas of maintaining a strong governmental influence on the private sector while attracting foreign investment will continue.