Ethiopia’s debt profile is headed for another level. With over $52 billion debt, the country’s public debt is now more than 65% of the country’s Gross Domestic Product (GDP), and twice the GDP of the East African country of Uganda.
“We borrowed a lot of money but we have been unable to repay on the given time… We have borrowed significantly for infrastructure projects which really failed to achieve the desire result,” said Eyob Tekalign, State Minister of Finance of Ethiopia who presented the 11 months performance report to the Parliament.
What This Means
Although Ethiopia’s fast economic growth registered for over a decade was attributed to being driven by the public investment mainly relying on loan, the economic growth has not been able to make the country pay back its debt.
The Ethiopian government total debt from foreign and local lenders now surpasses $52.3 billion.
As a result, Ethiopia is now forced to restructure the debt repayment schedule negotiating with the major leading country — China as well as by avoiding new debts and new public investment projects
“We have already avoided commercial loans because these loans when they have matured have really created a challenge of accumulated debt,” he said explaining some of the actions undertaken by the ministry as a result of the ongoing reform launched by Prime Minister Abiy a year ago.
“…We have prioritized supply side of economic growth which means working on productive sectors including mining, tourism, manufacturing even agriculture. We are still importing wheat and edible oil which in an economy like Ethiopia is really unacceptable” the Minister said.