The Ethiopian government has announced it will significantly reduce and fully eliminate fuel subsidies imposed over the past four years by the end of February 2026. This move forms part of economic reform commitments made with international financial institutions. A new price adjustment took effect at the start of the current Tahsas month, raising diesel prices by 11 percent and benzene by 5 percent.
The Ethiopian government introduced fuel price subsidies in 2014 E.C., gradually reducing them until the end of Sene 2016 E.C. with plans for full elimination. However, to shield low-income groups from inflationary pressures, subsidies were reinstated starting from Hamle 2016 E.C.
A price adjustment, effective from the beginning of Tahsas, largely absorbs the global fuel price hikes that began in January 2025. In the past 12 months alone, diesel prices have risen by 43 percent and benzene by 42 percent, reflecting the step-by-step subsidy reduction process.
Lifting the subsidies aims to narrow price gaps with neighboring countries, curb smuggling, and ease legal trade barriers. Additionally, electricity tariffs are being adjusted every three months as planned, enabling power suppliers to manage their costs. By suspending fuel subsidies entirely until the end of February 2026, the government seeks to align domestic prices with international market levels.
