The current state of the Ethiopian political Economy can best be captured by the contrast between the promise of the ruling party and people’s high expectation from the new administration which was inaugurated on October 4, 2021. On the economic front, the country is facing both internal and external disequilibria and subsequent macroeconomic instability. Given the security, economic and political conditions in which the country is in, the new administration led by Prosperity Party carries enormous task, a burden that comes with electoral victory. In light of this, this paper tries to examine the current state of the Ethiopian economy and indicate the way out from the impasse. The first section of the paper briefly appraises the current state of affairs pertaining to the economy by focusing on macroeconomic management. This will be followed by identification of major challenges arising from the presumed deficits. The final section will outline the way forward and provide recommendations for policy consideration
