Ethiopia is touting a significant economic achievement as one of Africa’s most dramatic debt turnarounds.
Prime Minister of Ethiopia, Abiy Ahmed, has revealed that the country has been able to cut its foreign debt from $23 billion to $4.5 billion in just six years, adding that the current economic growth is not on the back of foreign loans.
This, he says, is an indication and proof that African economies can boom without overreliance on foreign loans.
Speaking before lawmakers in Addis Ababa, Abiy credited the country’s Homegrown Economic Reform Programme, launched in 2019, for transforming Ethiopia’s finances and restoring confidence in its economy. He said the once heavily aid-dependent economy had “built a system that stands on Ethiopia’s own capacity.”
Touting some of the achievements under the reform plan, the Prime Minister recounted that the government focused on mobilising domestic revenue, controlling inflation, and restructuring debt.
Annual state revenue has surged from 170 billion birr (about $2.95 billion) to a projected 1 trillion birr ($17.3 billion) this year. This is nearly a sixfold increase.
To stabilise the economy, the government spent 440 billion birr ($7.6 billion) in subsidies on fuel, fertiliser, public sector wages, and social protection initiatives, including school feeding programmes.
These interventions have pushed inflation down to 11.7%, its lowest level in years.
Abiy Ahmed says Ethiopia’s economy is standing tall again. The government has used every possible instrument to ease the cost of living, underscoring its administration’s success in reducing dependence on external borrowing.
Yet, while the macroeconomic numbers look promising, analysts warn that many households have yet to feel the recovery. Food and rent prices remain stubbornly high, eroding purchasing power, especially in urban centres.
Economists say Ethiopia’s experience offers lessons for other African nations grappling with debt distress. The country’s progress shows that fiscal discipline, targeted subsidies, and domestic revenue mobilisation can anchor stability.
They stress, however, that inclusive growth will depend on how well the government cushions ordinary citizens from lingering cost-of-living pressures.
