Fitch Ratings Ethiopia\u2019s credit rating at \u2018Restricted Default\u2019 amid debt restructuring Ratings has kept Ethiopia\u2019s long-term foreign currency rating at \u201cRestricted Default.\u201d This means the country is still considered to be in default on some of its foreign debt while it continues working through a major restructuring plan.<\/p>\n
Ethiopia has been in default on its only Eurobond since missing a $33 million interest payment in December 2023. The government is now trying to restructure about $15 billion in external debt under the G20\u2019s Common Framework, which it joined in 2021.<\/p>\n
In July, Ethiopia reached a preliminary deal with its official creditors that would give it $2.5 billion in debt relief through 2028. The agreement includes a small reduction in the total debt value, a three-year extension on repayment deadlines, and a 34% cut in debt payments during the ongoing IMF support program.<\/p>\n
Talks with private creditors are still ongoing. Recent meetings with a group of bondholders ended without a final deal. Those creditors had offered a 15% debt reduction plus a potential bonus payment linked to how well Ethiopia\u2019s exports perform compared to IMF forecasts.<\/p>\n
Since mid-2024, Ethiopia has made visible progress on economic reforms. The country allowed its currency to float more freely, which led to a depreciation of more than 60% in the official exchange rate. This move helped narrow the gap between the official and parallel market rates to around 10%. Inflation is expected to fall to about 12% in the 2026 fiscal year, down from nearly 16% in 2025.<\/p>\n
Foreign exchange reserves have also improved as more trade and investment funds are moving through legal channels. By the end of fiscal 2025, Ethiopia\u2019s reserves had grown to $4.6 billion, enough to cover around two months of imports, compared with just $1.4 billion a year earlier.<\/p>\n
The country\u2019s external accounts are also looking better. The current account deficit dropped sharply to $300 million in 2025 from $6 billion the year before, helped by higher gold and coffee exports.<\/p>\n
Economic growth remains strong, with Fitch expecting a 7% expansion in 2025 after 8.1% in 2024. Growth is being driven by good agricultural harvests, a rebound in construction and manufacturing, and rising activity in services like air transport and tourism.<\/p>\n
The government\u2019s budget deficit is projected to widen slightly to 1.7% of GDP in 2026, up from about 1.3% in 2025. Overall government debt is expected to peak at 40.4% of GDP in 2025 before easing to around 36.6% by 2027.<\/p>\n","protected":false},"excerpt":{"rendered":"
Fitch Ratings Ethiopia\u2019s credit rating at \u2018Restricted Default\u2019 amid debt restructuring Ratings has kept Ethiopia\u2019s long-term foreign currency rating at\u2026<\/p>\n","protected":false},"author":294,"featured_media":92596,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[5029],"class_list":["post-92595","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-us-markets","tag-fitch-ratings"],"reading_time":"2 min read","_links":{"self":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/92595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/users\/294"}],"replies":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/comments?post=92595"}],"version-history":[{"count":0,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/92595\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media\/92596"}],"wp:attachment":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media?parent=92595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/categories?post=92595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/tags?post=92595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}