Ethiopia's Public Debt May Hurt Future Economic Growth, IMF Say (Bloomberg)
Last Modified: 04:36 AM, Wed Dec 05, 2018

Ethiopia's large current-account deficit and public debt will constrain future growth and pose risks to the nation's medium-term outlook, the IMF said. The nation's public debt is estimated at 57.2% of GDP this fiscal year, an improvement from 61% in 2017-18, according to the IMF. It estimates Ethiopia's current-account deficit could narrow to 6.2% of GDP this fiscal year from 6.4% previously. "While debt is sustainable in the medium term, Ethiopia remains at high risk of debt distress," the Fund said today in a statement. "Restrained public-sector borrowing -- particularly on non-concessional loans -- while protecting pro-poor spending programs, will be key."

By Eric Ombok

  • Debt estimated at 57.2% of GDP this fiscal year, lender says
  • Horn of Africa nation’s economy is Africa’s fastest growing

(Bloomberg) --

Ethiopia’s large current-account deficit and public debt will constrain future growth and pose risks to the nation’s medium-term outlook, the International Monetary Fund said.

The Horn of Africa nation’s public debt is estimated at 57.2 percent of gross domestic product this fiscal year, an improvement from 61 percent in 2017-18, according to the IMF. It estimates Ethiopia’s current-account deficit could narrow to 6.2 percent of GDP this fiscal year from 6.4 percent previously.

“While debt is sustainable in the medium term, Ethiopia remains at high risk of debt distress,” the Washington-based lender said Wednesday in an emailed statement. “Restrained public-sector borrowing -- particularly on non-concessional loans -- while protecting pro-poor spending programs, will be key.”

The government will also need to mobilize additional tax revenue and boost exports to reduce vulnerabilities over the medium term, it said.

Ethiopia is Africa’s fastest growing economy and has held the position for most of the past decade, according to IMF data. In 2018-19, output is expected to expand by as much as 8.5 percent, compared with a forecast of 7.7 percent in the previous year.

The new government announced an ambitious reform program aimed at opening up the economy to private investment and competition to support sustainable growth.

To contact the reporter on this story:
Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editors responsible for this story:
Christopher Kingdon at ckingdon@bloomberg.net
Helen Nyambura, Hilton Shone

Powered by InfoDesk
RIS
InfoDesk Inc