Addis Abeba — Ethiopia's total public external and domestic debt stock, including both publicly guaranteed and non-guaranteed debt, increased by 25.3% over the past five years, reaching $68.9 billion by the end of June 2024.
This figure, representing 32.9% of the country's gross domestic product (GDP), reflects an 8.8% rise compared to the previous year, according to the latest Public Sector Debt Portfolio Report, published by the Ministry of Finance.
The report highlights exchange rate fluctuations as a key factor driving the increase in total public debt stock denominated in USD between 2019/20 and 2023/24.
Of the total public debt, domestic debt accounts for 59% ($40 billion), while external debt constitutes 41% ($28.9 billion). Over the past year, domestic debt increased by 14%, whereas external debt recorded a modest 2.5% growth.
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The report attributes the minimal rise in external debt stock to relatively lower disbursements from external loans compared to principal repayments, as well as fluctuations in the US dollar exchange rate.
Of Ethiopia's total outstanding external debt, multilateral agencies, which provide highly concessional loans, hold approximately 52%, while bilateral creditors possess a 28.31% share. The remaining portion is owed to private creditors.
The United States Dollar (USD) constitutes 45.84% of Ethiopia's external debt stock, followed by the Euro (6.58%) and the Chinese Yuan (1.52%).
The report also indicates that Ethiopia's current external debt as a percentage of exports stands at 179.8%, significantly exceeding the country's threshold of 150%. "This indicates that the ratio is above the baseline threshold," it stated.
However, the report emphasizes that the country's total public debt remains well within the World Bank and International Monetary Fund (IMF) benchmark of 35% in present value terms as a percentage of GDP.
This development follows the conclusion of discussions between the Ethiopian government and the IMF six months ago regarding a new program aimed at supporting the implementation of the second Homegrown Economic Reform. The agreement was reached after a significant decision by the government in late July 2024 to shift to a market-based foreign currency regime, moving away from the previous crawling peg exchange rate system.
The government anticipates that the debt service standstill agreement, amounting to $1.4 billion with the Official Creditor Committee (OCC) under the Paris Club members, will provide "significant temporary relief" to facilitate the reform's implementation. Combined with debt treatment under the Common Framework, estimated at $3.5 billion, the total debt relief package amounts to $4.9 billion.
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According to the report, the projected residual financing gap of $10.7 billion for the 2024/25-2027/28 program period will be addressed through multiple sources. The IMF is expected to contribute $3.4 billion, while $3.75 billion will come from budget support provided by the World Bank. "The remaining gap of $3.5 billion will be filled by financing associated with debt treatment under the Common Framework," the report stated.
Last week, the IMF announced the completion of its second review of Ethiopia's $3.4 billion Extended Credit Facility (ECF) arrangement. This milestone, announced on 17 January, 2025, enables an immediate disbursement of approximately $248 million, bringing total disbursements under the program to $1.611 billion.
In its statement, the IMF acknowledged that "Ethiopian authorities continue their efforts to restore debt sustainability and are taking steps to secure a debt treatment." The organization also commended "the progress made on debt restructuring negotiations" under the Common Framework.
