Ethiopia has not been at high risk to repay its debt, Prime Minister Abiy Ahmed said while presenting his government’s economic plan for the new Ethiopian budget year.
Addressing the national parliament on Monday, 8 July 2019, Abiy said the nation’s loan is insignificant yet the timely payment of debt has remained challenging to the country, he noted.
According to the Prime Minister, Ethiopia’s current loan constitutes 31 percent of the total GDP and it is by far lower than the debt owed by developed countries.
“Because of this fruitful debt restructuring negotiation the government carried out during the previous fiscal year (ended 7 July 2019), we have saved 400 million dollars, which was expected to be paid
during the past year,” Abiy elaborated.
Abiy said by correcting the approach to external borrowing, Ethiopia changed 47 percent of the commercial loan into concessional loan from China alone which, according to the premier, was a “great achievement.”
He said the new borrowing scheme, which shifted from commercial to concessional loans, has brought opportunities that helped the country emerge from economic crisis.
The PM revealed that as the country has not been listed among countries with heavy debt burden, it has been receiving loans from international financial organizations.
The premier said Ethiopia’s export performance has, however, become a challenge to repay its loan on a given time. As a result, the country has prioritized on the productive sector in order to stimulate the export sector.
The low export annual performance, which amounted to 2.1 billion dollars, has created hard currency shortage caused by the shortfall in paying debt, the premier added.