Ethiopia’s Credit Rating Sinks Deeper into Junk as Default Looms

Fitch Ratings has downgraded Ethiopia’s credit rating to “bad” due to an increased probability of non-payment of a $33 million coupon on its unique euro bond.

The East African country has not paid the coupon within a 14-day grace period, joining Zambia and Ghana as the continent’s countries declared in default.

Ethiopia’s economy has been severely impacted by the pandemic, decline in export prices, and drought. Inflation is high, and the country is struggling with a shortage of hard currency and increasing repayments of foreign debt.

In November 2022, the federal government and rebel forces in Tigray signed a truce to end a civil war.

Ethiopia requested debt relief under the G20 common framework in 2021, but progress was initially delayed due to the war. The government has asked the IMF for a new loan program worth $2 billion.