Ethiopia hopeful positive credit rating will attract investors

Standard & Poor’s (S&P) assigned Ethiopia ‘B/B’ foreign and local currency ratings.  It also said the outlook was stable, reflecting the view that strong growth will be maintained over the next year and the current account deficit will not rise.  “As a government, we are pleased with the outcome rating of these agencies,” said Ethiopia’s Economic and Finance minister Sufian Ahmed.

Sufian said the ratings would help attract foreign investors to the country “based on a reality on the ground”.  He said, “The rational why the government undertakes this exercise is mainly to help investors, mainly foreign direct investors, to have an objective assessment of the level of risk in Ethiopia, be it economics, be it political, be it in the peace and stability.” .

He said the ratings would also offer a chance for the government to enter international capital markets.  Sufian said, “We have not yet decided, but it’s abundantly clear that this (review) will pave the way to an opportunity to enter the capital market.”  He added, “It could eventually also diversify the source of our finance to implement some of the major developments that the government is undertaking.”

The minister said the government had chosen to refrain from borrowing due to the volatility of international markets and those of big league economies.  He stated, “Entering the capital market usually depends on the global financial market situations.”  He then indicated, “We don’t know what’s happening. Some major economies are recovering but some are not. The timing is also very important.”  Ethiopia is now sub-Saharan Africa’s fifth-biggest economy, in which the state has kept a firm grip on key sectors including banking and telecommunications