Ethiopia will strive to reduce its debt burden down to a manageable level, said Ethiopia’s prime minister in an apparent admission of the crippling impact of foreign debt on the national economy.

Taking questions from Ethiopian parliamentarians on Tuesday, Abiy Ahmed said: “The amount of [bilateral and multilateral] debt Ethiopia owed to foreign creditors is small compared to amounts owed by other African countries. But in terms of debt-to-GDP ratio, it is one of the highest.”

Last November, Fitch Ratings downgraded Ethiopia to CCC after the government announced that it was looking to make use of the G20 Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative.

Ethiopia, a Horn of Africa country, is said to have owed nearly $40 billion to foreign creditors.

According to Abiy, though being challenged by “locusts, floods and widespread conflict,” Ethiopia could make a turnaround of the debt distress situation in the next three years.

“In 2010, Ethiopia joined the list of high-debt distressed countries,” he said, adding that his administration launched wide-ranging activities to reverse the situation through expanding capital projects domestically and boosting exports.

According to Abiy, the Home-Grown Reform Agenda launched by his administration three years ago resulted in a reduction of 10% in the debt the country owed from 2018 to 2020.

“In 2018, the debt-to-GDP ratio amounted to 37.7%,” he said, adding that the figure was reduced in 2019 to 29.4% and further down to 26.8% in 2020.

“Another 10% reduction in the amount of debt in the coming three years would suffice to come out of the distressed situation,” he said.

“Ethiopia has been achieving a positive growth outlook over the past three years with 176.9 billion birr [$4.3 billion] GDP in 2018, which grew to 196.5 billion birr [$4.9 billion] in 2019 and 228.9 billion birr [$5.7 billion] in 2020,” he said.

While incomes kept growing, the amount of capital expenditures also kept going up, with 25 billion birr ($625 million) invested in 2018 that now stands at 34 billion birr ($850 million).

Capital expenditures in the road construction sector also doubled in the last three years, while in the healthcare sector they doubled from eight billion birr to 16 billion birr ($400 million) during the same period./agencies