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Ethiopiaâs debt: an economic and political liability
May 16, 2021
But the economic headwinds are equally strongâand they have the potential to compound political dilemmas.
As part of the state-led developmental project pursued by the Ethiopian Peoplesâ Revolutionary Democratic Front (EPRDF), most intensively after 2010, the government invested big, both directly and through state-owned enterprises (SOEs).
While the injected capitalâmainly to finance infrastructureâ produced impressive economic growth, the model was heavily reliant on debt. The sustainability of this formula depends both on realizing returns that are higher than the contracted interest rates and securing foreign exchange with which to repay interest and principal.