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Country Risk Service Ethiopia 4th Quarter Updater

  • ID: 5182697
  • Country Profile
  • October 2020
  • Region: Ethiopia
  • 20 Pages
  • The Economist Intelligence Unit
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Sovereign risk is CC-rated. An expansion of the fiscal deficit to an estimated 5.8% of GDP in 2020 and an economic recession provoked by the coronavirus (Covid-19) crisis will lift the public debt/GDP ratio, but this remains in line with Ethiopia's peers at 69.4%. Accommodative fiscal and monetary policies will only cushion the blow slightly, and will leave policymakers with challenges during the recovery, which will be constrained by political instability. However, Ethiopia will continue to meet its debt obligations.

Currency risk is CC-rated, reflecting currency volatility due to declining reserves and export receipts. Increased external sector risks stemming from the pandemic and a wide current-account deficit continue to exert pressure on the birr. The central bank will continue to support the birr heavily in the near term.

Banking sector risk is CCC-rated. Macroeconomic and credit risks have risen owing to the coronavirus-induced recession. Restricted access to foreign financing due to tighter global liquidity conditions, as well as state intervention and a possible increase in non-performing loans, continue to weigh on the sector.
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Country Risk Service Ethiopia 4th Quarter Updater

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

Central scenario for 2021-25: Political stability

Central scenario for 2021-25: Election watch

Central scenario for 2021-25: International relations

Central scenario for 2021-25: Policy trends

Central scenario for 2021-25: Fiscal policy

Central scenario for 2021-25: Monetary policy

Central scenario for 2021-25: Economic growth

Central scenario for 2021-25: Inflation

Central scenario for 2021-25: Exchange rates

Central scenario for 2021-25: External sector

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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