Fitch Downgrades Ethiopia's Ratings to Junk Territory

Dec 16 , 2023

Fitch Ratings has further lowered Ethiopia’s credit score into default territory of 'C' from 'CC' casting a deeper shadow on its fiscal stability and liquidity position. The score was revealed in the same week the country failed to make a coupon payment of 33 million dollars from its outstanding Eurobond of one billion dollars due on December 11, 2023. It is also in close succession to its score the month before, with a substantial risk of a default event linked to its engagement with the G20 Common Framework for debt treatment. Ethiopia’s international reserves plummeted to one billion dollars in 2023, barely covering a month of import payments. Last month, an agreement was reached with creditors on a suspension of debt service due from January 2023 to December 2024 —the debt treatment applied to direct obligations to all Official Credit Committee (OCC) members. Ethiopia had reached an agreement with China earlier in the year. Fitch also gave the country a rating of '5' for political stability, rights and the rule of law, institutional and regulatory quality, and control of corruption, reflecting serious stability concerns. The score mirrors the feeble political transitions and institutional capacity, uneven application of the rule of law and corruption.