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Country Risk Service Ethiopia 3rd Quarter

  • ID: 5125542
  • Country Profile
  • July 2020
  • Region: Ethiopia
  • 25 Pages
  • The Economist Intelligence Unit
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The sovereign risk rating has been downgraded to CC, and the underlying score has deteriorated by 4 points, owing to the impact of the coronavirus pandemic. We expect the economy to contract this year, particularly in the second quarter, and public debt and the twin current-account and fiscal deficits to increase. Accommodative fiscal and monetary policies will only cushion the blow slightly, and will leave policymakers with challenges during the recovery.

The currency risk rating has been downgraded to CC, with the underlying score worsening by 3 points. This reflects currency volatility, owing to declining reserves and export receipts. Increased external sector risks stemming from the coronavirus pandemic and a wide current-account deficit continue to exert pressure on the birr.

Banking sector risk remains CCC-rated, but the underlying score has worsened by 3 points as a result of macroeconomic and credit risks, which have risen with the coronavirus pandemic. Restricted access to foreign financing amid tighter global liquidity conditions, state intervention and a possible increase in non-performing loans continue to weigh on the sector.
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Country Risk Service Ethiopia 3rd Quarter

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Sovereign risk
Current assessment
Positive factors
Negative factors
Rating outlook

Currency risk
Current assessment
Positive factors
Negative factors
Rating outlook
Foreign-exchange regime

Banking sector risk
Current assessment
Positive factors
Negative factors
Rating outlook

Generic risks
Political risk assessment
Economic structure risk assessment

Country risk
Overall country risk

Central scenario for 2020-24: Political stability

Central scenario for 2020-24: Election watch

Central scenario for 2020-24: International relations

Central scenario for 2020-24: Policy trends

Central scenario for 2020-24: Fiscal policy

Central scenario for 2020-24: Monetary policy

Central scenario for 2020-24: Economic growth

Central scenario for 2020-24: Inflation

Central scenario for 2020-24: Exchange rates

Central scenario for 2020-24: External sector

Central scenario for 2020-24: External financing requirement

Central scenario for 2020-24: External debt

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service
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