By Ebi Kesiena
Ethiopia’s nominal GDP, measured in US dollars, plummeted from $207 billion in June 2024 to $100 billion by September 2024, according to the Ministry of Finance’s quarterly government debt report released on Monday.
The report attributes this significant drop to the introduction of a market-based foreign exchange trading system in July 2024, which led to a substantial devaluation of the Ethiopian birr and a corresponding reduction in the dollar-converted GDP.
“The GDP, which was $207 billion in June 2024, dropped to $100 billion within three months following the currency adjustment,” the report stated.
Consequently, Ethiopia’s total public debt-to-GDP ratio surged from 32.9 per cent in June 2024 to 50.3 per cent by September 2024. The government’s external debt rose from $28.8 billion to $31 billion during this period, driven by the exchange rate adjustment and new loans totalling $1.6 billion from the International Monetary Fund (IMF) and the World Bank.
The report highlights a 7.5 per cent increase in the external debt stock, with the external debt-to-GDP ratio more than doubling from 13.9 per cent in June 2024 to 30.9 per cent by September 2024. This exceeds the 30 per cent ceiling recommended by the IMF and the World Bank for low-income countries.
Similarly, the domestic debt-to-GDP ratio also surpassed recommended thresholds, although the domestic debt in dollar terms declined significantly following the currency devaluation.
