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Country Debt Guide 38
Country Debt Guide 39 ethiopia Debt History In the 1980s, Ethiopia accumulated a substantial amount of debt chiefly to procure arms for its civil war with present day Eritrea. The diversion of resources away from productive sectors was associated with low economic growth, which averaged 0.7% during the 1980s decade. The combination of rising debt, higher interest rates on the debt due to global shocks, and poor GDP performance led to a rapid increase in the debt to GDP ratio, which peaked at 151% in 1994. The country’s indebtedness was eventually brought under control in the 2000s through various debt relief efforts, as shown below. $1.9 billion committed debt relief ETHIOPIA IN 2021 4.3% economic growth 75% public debt to GDP ratio -3.1% budget balance 4 / 8 DR’s Debt Transparency Index In recent years, Ethiopia has been one of the world’s fastest growing economies, with annual GDP growth averaging 9.1% from 2015 to 2019 on the back of public investment and private consumption. Starting from a low base, the country has prioritized public investment financed through debt, which propelled the growth of manufacturing and services but led to a doubling of public debt to 60% of GDP in the last decade. It has the highest expected growth rate in 2020, 3.2%, amongst all countries this guide has analysed. 101 102 through HIPCI $141 million Chinese debt relief $7 million UK debt relief $46 million USA debt relief Despite strong growth, tax revenue as a share of GDP has consistently declined since 2014, reaching 7.5% in 2019, due to poor tax compliance in key sectors and political unrest. Nevertheless, the Ethiopian government made progress in narrowing the budget deficit to 2.5% last year through expenditure cuts and fiscal consolidation in response to lower revenue collection. Key interventions included the implementation of a Public Debt Management and Guarantee Issuance Directive to reduce borrowing by state-owned enterprises as well as a reduction in public 103 imports. The IMF has assessed Ethiopia’s debt sustainability rating as high risk in 2019 because of the country’s limited 104 sources of foreign exchange in light of poor export performance. Exports represent only 7.9% of GDP, one of the lowest in Africa. The composition of exports is relatively undiversified and commodity-dependent, with low 105 value-added vegetable products accounting for 64.7% of total exports. Partly as a consequence, Ethiopian reserves are low and vulnerable: at just $4.2 billion in 2019, usable reserves are hardly enough to cover 2 months 106 of imports. Recognizing these issues, the government has introduced a Homegrown Economic Reform Plan 107 (HERP) comprising macroeconomic, structural and sectoral policies to reduce instability. The types of projects Ethiopia has initiated with loans from China and the World Bank are shown below.
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Page 3 and 4: Country Debt Guide 13 Angola Debt H
Page 5 and 6: Country Debt Guide 15 Angola Figure
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Page 9 and 10: Country Debt Guide 19 Cabo Verde Ch
Page 13 and 14: Country Debt Guide 23 Cameroon Chin
Page 15 and 16: Country Debt Guide 25 Cameroon To h
Page 17 and 18: Country Debt Guide 27 Republic of C
Page 19 and 20: Country Debt Guide 29 Republic of C
Page 21 and 22: Country Debt Guide 31 djibouti Debt
Page 23 and 24: Country Debt Guide 33 djibouti Curr
Page 25 and 26: Country Debt Guide 35 Egypt Debt Hi
Page 27: Country Debt Guide 37 Egypt This re
Page 31 and 32: Country Debt Guide 41 ethiopia Curr
Page 35 and 36: Country Debt Guide 45 ghana However
Page 37 and 38: Country Debt Guide 47 ghana Further
Page 39 and 40: Country Debt Guide 49 Kenya Debt Hi
Page 41 and 42: Country Debt Guide 51 Kenya Current

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