By Rafiq Raji, Ph.D.
Moody’s sees the Ethiopian economy growing by 10% on average over the next 2 years. Strong growth expectations are largely on the back of continued public investments. The second Growth and Transformation Plan (GTP II) due in June should provide insights on authorities’ plans. On the fiscal side, Moody’s notes the authorities’ prudence; with debt still mostly concessionary. State-owned enterprises’ (SOEs) debt burden – mostly commercial – colour this assessment to the downside, however. A significant portion of Ethiopia’s budget remains donor-funded. There are no significant risks in this regard. Moody’s notes as much. Institutional weaknesses remain constraining, however. Others are its still relatively small economy and low per capita income. Long-running FX shortages also weigh on the country’s momentum. Still, Ethiopia’s capacity to fulfill its debt obligations remain strong.