On Oct. 21, 2016, S&P Global Ratings affirmed its 'B/B' long- and short-term foreign and local currency sovereign credit ratings on The Federal Democratic Republic of Ethiopia (Ethiopia). The outlook is stable.
OVERVIEW
Sizable current account deficits and relatively low levels of central bank reserves covering only two months of current account payments characterize Ethiopia’s external position.
Political uncertainty is increasing, with a number of public protests taking place across the country in recent months.
However, our baseline expectation remains that political tensions will not escalate and Ethiopia’s economic performance will strengthen, with real GDP expansion averaging close to 8% annually over 2016-2019, higher than many other countries at a similar stage of development.
We are therefore affirming our 'B/B' ratings on Ethiopia.
The stable outlook reflects our expectation that political tensions will not escalate, while economic performance will remain robust and current account deficits and the accumulation of public sector debt (including that of state-owned enterprises) will not materially deviate from our forecasts over the next 12 months.
