Ethiopian Business ReviewAccording to the International Monetary Fund (IMF), several highly indebted emerging countries have obtained significant loans from China. These loans are part of China’s broader investments in global infrastructure through the Belt and Road Initiative (BRI), also known as the New Silk Road. Launched in 2013, the BRI is an ambitious project to create an extensive network of railways, energy pipelines, highways, and streamlined border crossings.
Will it Rain Relief or Ruin?
Ethiopia’s debt is undoubtedly mounting. Although the debt to GDP ratio has shown some signs of decline, the debt in actual figure is increasing.
The IMF and other economic institutions project that Ethiopia’s debt-to-GDP ratio will increase in the near term, potentially reaching 50Pct by 2024. Some analysts believe Ethiopia can manage its debt burden sustainably, while others express concerns about the potential debt crisis, which is already looming as the country missed a USD33 million Eurobond coupon payment on December 5. The default on the Eurobond coupon marks a challenging economic phase for Ethiopia. This development comes amidst internal conflicts, high public debt, and ongoing discussions with the IMF for a potential financial bailout and debt restructuring with G-20 countries.
