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.
30 Aug 2018
Ethiopia’s prime minister remains committed to economic and political reforms while recent developments in Eritrea could mark a turning point in the country’s international isolation
Event Recent developments in Ethiopia indicate that prime minister Abiy Ahmed plans to reform the country. His rapprochement towards Eritrea was ...