Ethiopia’s sources of finance are thinning, calling into question the sustainability of the large government-financed GDP expansion of the last fifteen years. The recent decision of the US to impose economic sanctions on Ethiopia has only worsened the situation of Ethiopia’s external financial sources, already crippled with high debts.
In a bid to maintain the 10Pct average annual growth, government needs to invest 37Pct of GDP—very difficult to fulfill from only tax and FDIs weakened by conflict and COVID-19. Even the highly expected telecom license sale did not garner expected amounts.
New investments are critical to maintain the pace of growth and fulfill the demands of a fast-growing population and fend off soaring inflation and unemployment. Finalizing the megaprojects of the past decade needs further investment and starting new ones seams dreamy. EBR’s Ashenafi Endale navigates alternative venues left for development financing.