Africa
Moderate RiskLatest data: 2019 | Updated 2/2/2026
31.4%
22696550.0%
7.6%
$149.7B
Inflation: 21.0%
Debt Service Crisis
Ethiopia spends 22696550.0% of government revenue on debt payments, leaving less than half for public services, infrastructure, and development. This level is widely regarded as unsustainable.
High Inflation
Ethiopia's inflation rate of 21.0% is severely eroding purchasing power, disproportionately affecting the poorest households and undermining macroeconomic stability.
Import Cover Critical
Ethiopia's foreign exchange reserves cover only 1.8 months of imports, well below the 3-month minimum threshold. This leaves the economy highly vulnerable to external payment shocks and currency crises.
Negative Real Returns
Ethiopia's GDP growth of 7.6% is not outpacing inflation at 21.0%, meaning the economy is shrinking in real per-capita terms and eroding the value of domestic investment.
External debt by creditor type
No composition data available
No historical data available
Ethiopia is Africa's second-largest population and was one of its fastest-growing economies. The Tigray conflict, foreign exchange crisis, and subsequent debt default have fundamentally altered the picture.
Ethiopia requested G20 Common Framework restructuring in 2021 — among the first countries to do so. Three years of creditor coordination challenges followed, particularly with China. In December 2023, Ethiopia became the first African sovereign to default on a Eurobond in decades. The restructuring is now underway with significant debt relief expected.
Ethiopia is past the crisis peak but recovery will be slow. The restructuring should reduce debt to sustainable levels, but the country faces years of rebuilding. For investors, this is a long-term play — we see value in post-restructuring instruments once terms are finalized.