The International Credit Rating Agency Fitch Affirms Ethiopia at ‘B’, Outlook Stable

The international rating agency Fitch Ratings has affirmed Ethiopia's Long-term foreign currency Issuer Default Rating (IDR) at 'B' with stable outlook, the rating agency reported on Friday, November 7th, 2014.


(The following statement was released by the rating agency)

PARIS/LONDON – Fitch Ratings has affirmed Ethiopia’s Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘B’. The Outlooks on the Long-term IDRs are Stable. The Country Ceiling and the Short-term foreign currency IDR are both affirmed at ‘B’. KEY RATING DRIVERS Ethiopia’s ‘B’ IDRs reflect the following key rating drivers:- -Ethiopia is vulnerable to shocks even compared with ‘B’ rated peers despite strong improvements in its World Bank governance indicators and development indicators over the past decade. This is balanced by strong economic performance and improved public and external debt ratios since debt relief under HIPC in 2005-2007. -Macroeconomic performance is broadly in line with rated peers. The public sector-led development strategy implemented over the past decade, focusing on heavy investments in infrastructure, has sustained strong real GDP growth, which reached an estimated 10.3% in the fiscal year to 7 July 2014 (FY14), above most regional peers, although it may be overestimated according to previous reports by the IMF. Inflation, which has historically been high and volatile, has slowed to single digits since October 2013, due to a combination of moderate international food prices and reduced central bank financing of the budget deficit. However, Fitch believes inflation remains vulnerable to food price variations. -Public finances compare favourably with ‘B’ rated peers, but are exposed to rising contingent liabilities.

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