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Parliament Cautions Finance Minister Over Rising Domestic Debt

May 23 , 2024

Ethiopia's domestic debt has crossed 1.2 trillion Br ceiling, causing an uproar in the federal legislative house. Members of the Standing Committee for Planning, Budget & Finance called for its careful management, grilling Minister of Finance Ahmed Shide during his nine-month performance report before parliament yesterday.

The Minister credited the growing use of treasury bills and bonds which are mandatory to most commercial banks as a preferred choice of financing this debt.

“We've not taken any commercial loans over the past five years,” he told legislators.

However, both Committee Chairperson Desalegn Wedajo and his deputy, Abraham Alemayehu (PhD), chose to be cautious.

“It could become a source of nuisance soon,” Abraham cautioned.

Ethiopia’s total debt stock has reached close 65 billion dollars up until December 2023, rising by 1.63pc from the previous year, with domestic debt accounting for 55.6pc of the total debt stock.

Ahmed stated that Ethiopia had met only 10pc of the planned 512.5 million dollar debt servicing plans in the nine months due to the attainment of an interim debt suspension reached with some creditors. While the government has reached an interim debt suspension agreement on 1.44 billion dollars, ongoing negotiations remain on a further 490 million dollars amid a larger restructuring.

Ahmed disclosed plans to raise the country’s debt level to moderate if ongoing deliberations under the Common Framework mechanism under the G-20  bear fruit. The International Monetary Fund's (IMF) package is necessary for success in the debt restructuring aspiration.

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