Ethiopia has plunged into economic uncertainty, defaulting on a $33 million interest payment due on December 11. This setback follows the Tigray civil war, impacting investor sentiment and economic growth.

The Global Debt Crisis Unfolds

Ethiopia joins the ranks of nations like Sri Lanka and Lebanon, standing at the brink of a debt crisis. Over 70 low-income countries grapple with a colossal debt burden of $326 billion. China, the largest creditor, poses a significant challenge for debt servicing. A December 2023 World Bank report signals a 5% increase in debt servicing payments for developing countries, with Arab nations like Tunisia, Egypt, Jordan, and Lebanon facing high-risk debt scenarios.

Challenges in Debt Restructuring

Ethiopia's debt crisis centers around a missed $33 million interest payment on a $1 billion bond from 2014. Despite ongoing restructuring talks, resolution proves elusive due to differences between China and Western countries and private lenders' reluctance. Ethiopia's debt to GDP ratio stands at 46.37, lower than Kenya's 67.94, yet liquidity issues persist.