Ethiopian government total debt from foreign and local lenders surpasses $52.3 billion, the Ministry of Finance of Ethiopia said.
The total external and domestic debt of the country has reached $27 billion and 731 billion birr ($25.4) respectively. The Ministry has made the announcement on Friday in its 11 months report for the Ethiopian fiscal year started July 8, 2018. Last January the total debt of Ethiopia was around $50 billion.
Over the past 11 months, Ethiopia has managed to pay $9.4 billion, according to the report. The country has been suffering from huge debt burden mainly due to huge public investment, low level of export performance and weak private engagement.
Though Ethiopia’s fast economic growth registered for over a decade was attributed to be driven by the public investment mainly relying on loan, meanwhile the economic growth has not been able to make the country pay back its debt.
“We borrowed a lot of money but we have been unable to repay on the given time… We have borrowed significantly for infrastructure projects which really failed to achieve the desire result,” said Eyob Tekalign, State Minister of Finance of Ethiopia who presented the 11 months performance report to the Parliament.
As a result, Ethiopia is now forced to restructure the debt repayment schedule negotiating with the major leading country – China as well as by avoiding new debts and new public investment projects.
“We have already avoided commercial loans because these loans when they have matured have really created a challenge of accumulated debt,” he said explaining some of the actions undertaken by the ministry as a result of the ongoing reform launched by Prime Minister Abiy a year ago.
“…We have prioritized supply side of economic growth which means working on productive sectors including mining, tourism, manufacturing even agriculture. We are still importing wheat and edible oil which in an economy like Ethiopia is really unacceptable” the Minister said.
The Gross Domestic Product (GDP) in Ethiopia was worth $80.56 billion in 2017. This year the government expects 9.2 percent growth though the economy of the higly indebted east African country has been not doing so well as a result of the internal political crisis and instability.