Of late, the Ministry of Finance announced that the country’s international and domestic debt is estimated to be 50 billion USD or 1.4 trillion Birr.
The government is also expected to pay seven billon USD in the next three years alone. Looking the aforementioned loan amount and taking into accounts the nation’s overall export earnings which have not been more than three billion USD for the last three years, any person that has basic economic knowledge can guess debt distress.
Apparently, the government has been putting on various financial and monetary policies to cope up with the situation particularly regarding the ever increasing debt burden. For instance, members of Ethiopian Diaspora have been entitled to deposit any amount of foreign currency in state and private banks here. Previously they had 50,000 USD limit.
The government also took measures like expanding the number of businesses that can accept payment in foreign currency, buying minority shares on strategic public companies and fully privatize other enterprises by the domestic and foreign firms. Directly or indirectly these initiatives would help the country bringing a great amount of foreign currency.
In other words, the nation will enable to pay its debt on time as it earns more foreign currency. Of course, in a bid to reduce the loan burden, the government is right now working tirelessly on restructuring the economy, increasing remittances, extending the debt repayment period, avoiding short term loans and the like.
More importantly, carrying out independent feasibility studies on mega projects is the primary focus of the government. This is because most of the loans were secured for such development activities. Plus, the ongoing efforts of renegotiating debt payback time need to be done in a fast manner than ever. When Prime Minister Dr. Abiy Ahmed made his first state visit to China last August, he succeeded in extending debt repayment period with that country.
By the same token, the Premier also recently told MPs that his government has enabled to reschedule 60 % of the country’s loan repayments to 30 years from 10 years. Thus, the government has to keep on persuading lenders to extend the repayment period or obtain debt relief as much as possible.
Apart from working to increase the nation’s annual amount of remittances worth five billion USD, the government needs to put an end to the black forex market via encouraging members of Ethiopian Diaspora to use formal channels for transferring money under any circumstances. It is obvious that the government is stepping up efforts in bringing back the money that were laundered to overseas.
If the government manages to win its all out war against money-laundering, it will give impetus to debt repayment activities in one way or another. In general, Ethiopia’s debt has reached a whooping 50 billion USD and it is also 58 percent of the country’s GDP. Therefore, using diplomatic skills to extend debt repayment is a must and it has to be the top priority of the government On the top of that engaging actively in debt relief negotiation has to be the forefront of the debt settlement.
It is also true that the government has been getting international loans to infrastructural development, mega projects and commerce. But, from now and onwards, the government has to secure loans only for projects is proven to be feasible by all standards. The feasibility studies of the projects have to be conducted by professionals and impartial bodies. No more emotional and political motivated projects!
The Ethiopian Herald, February 5/2019
