Debt Management Startegy
This section aims at providing investors with a comprehensive overview of Ethiopia’s public debt and medium-term debt management strategy. In this section, "External Debt" refers to public debt which is denominated in a currency other than birr and "Domestic Debt" refers to debt denominated in birr. Both central government debt and state owned enterprises’ debt, including those SOEs which do not require central government guarantee to borrow externally, are included in the debt monitoring and analysis.
Central government domestic debt in Ethiopia mainly consists of Treasury Bills and direct advances from the Central Bank. Besides, most of SOEs domestic debt is held by the state-owned Commercial Bank of Ethiopia, which limits the risk of debt distress.
Public external debt remains sustainable, as evidenced by the IMF classification of Ethiopia within the group of countries with a moderate risk of external debt distress. Despite getting market access, the major part of external debt comes from multilateral and bilateral official sector creditors, mainly granted at concessional terms. In the medium to long term, the expected increase in exports and a prudent recourse to non-concessional borrowings are expected to further improve Ethiopia’s external debt indicators. Moreover, the fact that external loans are being used primarily to finance growth-enhancing infrastructure helps reduce the risk of debt distress.
In order to evaluate and manage the risk associated with its indebtedness, facilitate the coordination between the fiscal and monetary authorities and enhance transparency, Ethiopia has adopted a multiannual Medium Term Debt Management Strategy (MTDS) which currently covers the period 2013-2017. This MTDS provides a framework to ensure that the government's financing needs and payment obligations are met at the lowest possible cost consistent with a prudent degree of risk.
Moreover, in order to contain public external indebtedness, the authorities have increased their oversight of state-owned enterprises, which are in the lead for major infrastructure projects and thus likely to contract much of the external, non-concessional debt.
Debt Statistical Bulletins