Ethiopia’s external liquidity is under pressure because of rising short-term debt which resulted from infrastructure developments and the recent drought. Violent anti-government protests show that ethnic tensions are on the rise in the country, though for now, they remain contained thanks to the state of emergency imposed in October. Protests have been partly directed towards foreign investors, and have led to a decrease in foreign direct investments (FDI). This is particularly worrying for Ethiopia because the country has been struggling with a relatively large current account deficit and in recent years has heavily relied on FDI to fund it. It risks putting the already-low foreign exchange reserves (currently 1.9 months of import cover) further under pressure.
27 Feb 2018
Rapid public debt build-up in Sub-Saharan Africa
Deteriorating public finances and transparency issues degrade public debt sustainability in Sub-Saharan Africa Highlights: