BY ABEBE WOLDEGIORGIS
The Ministry of finance recently announced that Ethiopia’s foreign debt rose to 54.7 billion USD while the debt from domestic sources mostly from the commercial bank of Ethiopia is 945 billion Birr. Many agreed that currently it is hard to repay the debt.
In an exclusive interview with The Ethiopian Herald, Hibret Insurance General Manager Zafu Eyesuswork Zafu said that repaying the debt is not an easy task. Probably, it is also the first time for Ethiopia in finding itself in such a critical situation.
He further said, remembering that in the Derg era though it faced huge shortage of hard currency, the nation delivered its debt repayment duty by whatever means.
Since the current debt is not an easy one, negotiating the matter with loan providers to prolong the payment schedule is essential.
If it is possible requesting amnesty to loan providers also it should be taken as a way out.
Ethiopia’s major hard currency earner commodities are agricultural products with no value addition and the fluctuation of the price in the international market affects the nation earning capacity.
As to him, due to the current political turmoil witnessed in the various parts of the country, the nation is preoccupied in managing the crises. As a result, this year and the coming years agricultural products volume might fall which brings its own drawback on export, a source of hard currency earning.
Asked whether loan provider countries put pressure to regain their money on time or not, Zafu said that Ethiopia will try its level best to pay the money but as the debt is beyond its repaying capacity nothing
will happen. What they probably try is to block additional loan not to be given to the county.
With regard to repaying the 945 billion Birr domestic debt, he said, as long as the government wants to cover its expenditure, borrowing and refunding money will continue and the national bank reports the matter to the Prime Minister.
Most public enterprises have borrowed loans from commercial banks and did not refund the money. Billions of Birr provided in the form of loan to sugar projects is spent and such situation further harms the nation economy.
As to him, 90 percent of the money in banks belongs to the shareholders and the depositors and only 10 percent of it belongs to the bank and used for paying interest and to cover administrative costs.
Asked about the challenges the bank has faced in case the depositors request to withdraw their money, he said that not all depositors take their money once. Hence, there is no anxiety in this regard but if it occurs, the government might be forced to print additional money with a view to closing the gap.
The Ethiopian Herald January 8/2021