Written prior to the devaluation of the Birr and related adjustment measures, this paper is concerned with issues of economic reform in Ethiopia. The first section reviews the country's economic and social crisis. The second considers the prospects for economic reform and recovery by focusing on the political environment, the relative roles of the state and private sectors; the link between economic reform and growth (with special attention to structural adjustment in general and exchange rte adjustment in particular) and the social dimensions of economic reform. It concludes by arguing that the most significant determinant of the prospects for economic reform and growth is the political environment