Ethiopian Prime Minister Abiy Ahmed has announced that his government successfully restructured approximately 4.5 billion dollars in foreign debt over six years, describing the achievement as evidence that African economies can grow without overreliance on external borrowing. He made the remarks Tuesday while addressing the House of People’s Representatives in Addis Ababa.
Ahmed credited the country’s Homegrown Economic Reform Programme, launched in 2019, for transforming Ethiopia’s finances and restoring confidence in its economy. The prime minister stated that the once heavily aid dependent nation has built a system standing on Ethiopia’s own capacity. He emphasized that current economic growth does not rest on new foreign loans.
Annual state revenue has surged from 170 billion birr, approximately 2.95 billion dollars, to a projected one trillion birr, about 17.3 billion dollars this year. This represents nearly a sixfold increase in government income. Ahmed described the revenue growth as fundamental to reducing dependence on external creditors and strengthening domestic fiscal capacity.
The government spent 440 billion birr, roughly 7.6 billion dollars, in subsidies on fuel, fertilizer, public sector wages, and social protection initiatives including school feeding programmes. These interventions pushed inflation down to 11.7 percent, its lowest level in years. The prime minister told lawmakers his administration used every possible instrument to ease cost of living pressures.
Ahmed’s claims about debt reduction appear to reference successful rescheduling agreements rather than absolute elimination of obligations. Ethiopia’s total external debt remains around 23 billion dollars, according to recent government statements and international financial institutions. The country negotiated debt restructuring under the G20 Common Framework, converting some commercial loans into more favorable concessional terms.
The International Monetary Fund and World Bank described Ethiopia’s debt as unsustainable last month, citing surging short term obligations and falling foreign reserves. Negotiations with Eurobond holders have stalled, with private creditors pushing for repayment under original commercial terms given Ethiopia’s rising export revenues. The government advocates managing these debts under the Common Framework Agreement providing more favorable loan terms.
Despite promising macroeconomic indicators, analysts warn many households have yet to feel the recovery. Food and rent prices remain stubbornly high, eroding purchasing power especially in urban centers. Government wage increases have been partly offset by soaring living costs in cities like Addis Ababa.
Ahmed highlighted agricultural achievements including wheat production climbing from 47 million to 280 million quintals. Coffee exports tripled, bringing in 2.5 billion dollars last year. He argued these gains proved Ethiopia could feed itself and become a regional breadbasket. Total export earnings reached 8.3 billion dollars in the previous fiscal year, the highest in Ethiopian history.
The prime minister outlined ambitious infrastructure projects including a 10 billion dollar airport in Bishoftu set to become Africa’s largest. He referenced a Dangote fertilizer plant capable of producing 30 million quintals of urea and plans to build 1.5 million homes over six years. These initiatives form part of what Ahmed described as Ethiopia’s multi sectoral transformation.
Some lawmakers expressed frustration during the parliamentary session over ongoing insecurity, inflation fatigue, and the government’s preoccupation with securing access to the Red Sea. The tone in the chamber proved less celebratory than the prime minister’s speech, with questions about how economic growth is distributed and whether reform benefits ordinary citizens.
Economists suggest Ethiopia’s experience offers lessons for other African nations grappling with debt distress. The country’s approach demonstrates that fiscal discipline, targeted subsidies, and domestic revenue mobilization can anchor stability. They stress however that inclusive growth depends on how well government cushions ordinary citizens from lingering cost of living pressures.
Ethiopia began negotiations last year to address debt repayment challenges after years of internal conflict, currency devaluation, and economic turmoil. As of September, total external debt exceeded 23 billion dollars with private creditors holding around five percent. The remainder consists primarily of a one billion dollar Eurobond and obligations to bilateral and multilateral lenders.
Ahmed emphasized that Ethiopia has not taken any new commercial loans since the national reform began. He characterized the debt burden that once constrained growth as structurally repaired. The prime minister projected confidence despite cautious assessments from external observers about the sustainability of current debt levels and service obligations.
International financial institutions have recognized Ethiopia’s reform trajectory while maintaining concerns about vulnerability to external shocks. The balance between celebrating macroeconomic progress and addressing persistent household level hardship remains a central challenge for policymakers in Addis Ababa.
