2023-11-03 17:39:34
Fitch downgraded Ethiopia’s rating further into high-risk territory, from CCC- to CC, citing gaps in the country’s external financing that it said increased its likelihood of default.
Ratings in the CC range are viewed as at imminent risk of default.
Fitch cut the country’s foreign currency debt rating, also citing the “likely risk of default” as it seeks debt relief under the G20 “Common Framework” agreement.
“The material decline in external liquidity and significant external financing gaps have increased the likelihood of a default event,” the rating agency said in a statement.
Africa’s second-most populous country has been struggling with debt, which government figures put at $28.2 billion at the end of March, following a punishing two-year civil war that ended last year.
Ethiopia requested a debt restructuring in early 2021 under the Common Framework agreement established during the COVID-19 pandemic to help low-income countries weather debt crises.
Fitch said delays in the Common Framework process, which includes China, and a slow bailout request from the International Monetary Fund mean the country is desperately short of cash.
“Fitch expects bilateral liquidity relief to be insufficient to address large funding gaps and improve debt sustainability over the medium term in the absence of renewed funding from international financial institutions,” it said.
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