Ethiopia Eyes ‘moderate’ Debt Rating Once IMF Approves Debt Restructuring

• Ethiopia saved USD1.44 billion debt service due

Officials at the Ministry of Finance say they expect to see Ethiopia’s external debt standing upgraded to ‘moderate’ status following an agreement with external creditors and the International Monetary Fund (IMF).

An IMF debt restructuring program is also expected to eliminate Ethiopia’s budget deficit for up to six years, according to Ahmed Shide, minister of Finance.

“Negotiations for debt restructuring under the Common Framework are ongoing. Once talks are finalized and external debt restructuring is approved, we will be able to manage the budget deficit for the next five or six years,” he told lawmakers while presenting the Ministry’s nine-month performance report at Parliament.

“Negotiations are ongoing. We’re working hard to make our debt sustainable,” said the Minister.

He disclosed that an interim debt payment suspension agreement reached with bilateral creditors such as China last November helped the country save more than USD 1.4 billion in service payments this year. The payments have been rescheduled over the coming two years, according to the Minister.

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Ahmed indicated that the government is working for the rescheduling of an additional half a billion dollars in debt service payments, which could help cut expenditures next year.

Ethiopia’s external debt currently stood at USD28.4 billion, a slight increment from last year due to fresh disbursements from World Bank. Of the total, USD20 billion is owed to central government, while the rest to SOEs.

According to the finance ministers, Ethiopia’s debt to GDP is still sound but deteriorating compared to the stagnating export performance.