Prime Minister Abiy Ahmed reiterated Ethiopia's ability to manage its debt during questioning in parliament over the country's recent default.
Abiy told lawmakers his administration aims to reduce external debt to less than 10 percent of GDP. Currently at 17 percent of GDP, Ethiopia owes international creditors over 28 billion dollars, according to the Premier.
Ethiopia's economy and public finances face increased uncertainty after major credit ratings agencies declared the country in "selective default" in December 2023.
The default designation came after Ethiopia missed a 33 million dollars payment on its eurobond debt obligation falling due in December last year. It is the nation's first ever debt default on international markets in decades.
Both Fitch and Standard & Poor's downgraded Ethiopia's ratings as a result, raising fears that it would raise its borrowing costs. The failure to service existing debt renews doubts about Addis Ababa's ability to manage liabilities and access new financing.
Abiy argued that a nation that serviced 9.9 billion dollars in debt repayments over five years should have no issue repaying the 33 million dollars it owed eurobond holders in December.
Economists note the default still raises questions about debt sustainability given Ethiopia's economic challenges and implementation difficulties.
Parliamentarians pressed Abiy for more information on revenue collection to strengthen fiscal autonomy. While acknowledging shortfalls, he offered few new policy initiatives.
The PM's defiant stance in parliament reaffirms his view that Ethiopia's repayment track record allows it to regain creditors' trust going forward.
However, economists say regaining an investment grade will require transparent plans to resolve domestic conflicts and revitalize growth alongside responsible debt stewardship.
