Africa > East Africa > Ethiopia > Fitch affirms Ethiopia at ‘B’ with Stable Outlook

Ethiopia: Fitch affirms Ethiopia at ‘B’ with Stable Outlook

2017/06/15

The rating agency, Fitch has affirmed Ethiopia’s Long-Term Foreign- and Local Currency Issuer Default Ratings (IDRs) at ‘B’ with a Stable Outlook.

Fitch as well announced June 8, 2017 that the issue rating on Ethiopia’s senior unsecured foreign-currency bonds have been affirmed ‘B’, the country ceiling has been affirmed ‘B’ and the Short-Term Foreign- and Local Currency IDRs as well at ‘B’.

According to Fitch, Ethiopia’s rating at ‘B’ is weighed down by low development indicators, significant external imbalances and rapidly increasing national-owned enterprises deficit.

These weaknesses are offset by low and mostly concessional general government deficit and a track record of robust economic increase,” it said.

Ethiopia, despite social and political troubles lately has been experiencing remarkable economic increase for some time presently. It is one of the 10 nations in Africa estimated to grow above 5 % in 2017. The increase rate for Ethiopia is expected to be 7.5 %, the second highest next Ivory Coast, according to the Brookings Institute.

Fitch indicates, however that Ethiopia’s structural features remain a major credit weakness, with human and economic indicators ranking part the lowest of its sovereigns.

“At $1,500, Ethiopia’s purchasing power parity gross national gain ie well below the ‘B’ media of $7,720. The long-standing challenges raised by low governance indicators are underscored by the bout of social unrest experienced in 2016, particularly in the populous regions of Oromia and Amhara,” it said.

While the political situation has returned to normal in 2017, Fitch believes that the prolongation of the National of Emergency that was proclaimed in October 2016 for the initial time in two decades illustrates the persistence of significant underlying tensions, despite relaxation of some of its provisions.

In 2016 Ethiopia attracted additional foreign direct investment (FDI) than ever before, according to the World Investment Statement released by the United Nations Conference on Trade and Improvment(UNCTAD) June 7, 2017.

FDI flows to Ethiopia increased by 46 % to $3.2 billion in 2016, propelled by investments in infrastructure and manufacturing.

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