Keypoints:
- Foreign debt cut by 80 percent
- Inflation stabilised at 11.7 percent
- Analysts warn of high living costs
ETHIOPIA’S Prime Minister Abiy Ahmed has announced that the country’s foreign debt has plunged by 80 percent — from $23bn to $4.5bn — in just six years, describing the reduction as proof that the economy is now growing on its own strength.
Addressing lawmakers in Addis Ababa on Tuesday, Abiy credited his administration’s Homegrown Economic Reform Programme, launched in 2019, for restoring balance and reducing the nation’s dependence on external financing.
‘The economy is growing without foreign loans. We have built a system that stands on Ethiopia’s own capacity,’ Abiy told the House of People’s Representatives.
Fiscal turnaround under reform drive
The prime minister said Ethiopia’s annual government revenue, which once stood at around 170bn birr (about $2.95bn), is now projected to reach 1 trillion birr (about $17.3bn). He said the increase reflects stronger tax collection and renewed domestic production.
Abiy revealed that the government had injected 440bn birr ($7.6bn) in subsidies to stabilise inflation, now down to 11.7 percent — its lowest level since the reform programme began. Most of the funds, he explained, went into fuel, fertiliser and salary support, alongside social protection measures such as school feeding schemes.
‘We have used every possible instrument to ease the cost of living. Our economy is standing tall again,’ he said.
Pressure persists on household spending
Despite the upbeat figures, analysts caution that ordinary Ethiopians are yet to feel the full impact of the reforms. While inflation has slowed, food and rent costs remain high, eroding household purchasing power — a challenge echoed across many African economies seeking fiscal discipline amid global uncertainty.
Economists say Ethiopia’s macroeconomic stability remains fragile as the country navigates currency pressures and seeks to attract investment while avoiding renewed foreign borrowing.
Multilateral lenders have praised Addis Ababa’s fiscal prudence, noting the success of its debt rescheduling and domestic resource mobilisation. Yet, pressure is growing on the government to convert its debt success into tangible social gains.
Abiy insists the path to inclusive growth lies in sustained investment in local industry, agriculture and digital infrastructure. ‘We are building a resilient economy that no longer depends on external lifelines,’ he said.
