Ethiopia - Public Debt in Ethiopia - Policy Note

Ethiopia’s growth record, averaging 8 percent p.a. during 2005-2021, is underpinned by a public sector-led investment model, supported by increased public borrowing. However, this has led to debt accumulation casting doubt on the long-term sustainability of growth. The emergence of the COVID-19 pandemic and its economic impacts along with the eruption of conflict in Northern Ethiopia, aggravated the challenge of fiscal constraint and put public debt sustainability high on the policy agenda since the HIPC in 2006.