Saturday, July 13, 2024

The intricacy of debt and debt Management


The external debt of Ethiopia has stood at 26.8 percent of the gross domestic product (GDP) in 2019/20 budget year with slight decrement in comparison to the precious year.
The document that was issued by the Ministry of Finance (MoF) indicated that the country’s external debt has stood at USD 28.6 billion.
In terms of value, the debt has increased in comparison to the previous year but in terms of GDP share it has dropped by one percent, that is, from 27.8 percent to 26.8 percent.
In the 2018/19 budget year the country external debt stood at USD 26.77 billion and has since then increased to USD 28.6 billion.
The total debt of the government in the budget year that ended on June 30, 2020 was USD 54.87 billion, which is up from USD 53.7 billion in the preceding year.
Although the total public debt has shown slight increment the share to GDP has dropped to 51.4 percent from 55.7 percent of a year ago.
According to MoF document, from the total public debt, domestic debt amounted to USD 26.2 billion.
The document that was prepared by the Debt Management Directorate of MoF indicated that during the last 12 months there has not been any non-concessional borrowing by state owned enterprises (SOE’s) except that of Ethiopian Airlines and all the central government borrowing which is only from concessional sources.
Out of the total outstanding Public sector debt (External plus Domestic) is USD 3.1 billion owned by central government and the remaining USD 24.7 billion is owed by SOE’s.
Out of the total public external debt, 62 percent is owed by central government while the remaining 38 percent is by SOE’s, while the share of the total public domestic debt that is taken by central government is about 47 percent while the remaining 53 percent is that of SOE’s.
Similar to the external debt increment in the stated period the external debt disbursement has also increased in comparison with the preceding year.
According to MoF document, the external debt disbursement during the last 12 months of 2019/20 was USD 3.1 billion up from the previous year’s USD 2.7 billion.
In the year 2019/20, the external debt service amounted to USD 1.9 billion, down from USD 2 billion on the 2018/19 budget year.
From the serviced amount USD 407 million is covered by the central government and the balance by public enterprises.
The central government’s external debt refers to all external loans contracted between external creditors and MoF; while the government-guaranteed external debt comprises of loans and suppliers credits contracted by public enterprises.
The Ethiopian Electric Power, Ethiopian Electric Utility, Ethiopian Sugar Corporation, Ethiopian Railways Corporation, and Ethiopian Shipping Lines are SOEs that are guaranteed by MoF as well as the state-owned bank- the Commercial Bank of Ethiopia.
Ethiopian Airlines and Ethio-Telecom are examples of a public enterprises that took external loan without a government guarantee.

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