Addis Ababa, May 6, 2026 (FMC) — Ethiopia has called for coordinated and decisive action to address rising debt vulnerabilities across Africa, emphasizing that debt management has become central to macroeconomic stability and long-term development.
Speaking at the Second African Forum on Sovereign Finance in Addis Ababa, State Minister of Finance Semereta Sewasew said African economies are facing heightened fiscal pressures driven by global shocks, rising borrowing costs, and tightening financial conditions.
“Debt management is no longer a technical function at the margins of government—it is now central to macroeconomic stability, development strategy, and policy credibility,” she said.
The State Minister noted that successive global crises, including the COVID-19 pandemic and geopolitical conflicts, have significantly reshaped the sovereign financing landscape, increasing vulnerabilities across the continent.
She highlighted a decline in Africa’s median foreign exchange reserves relative to total debt—from about 44 percent in 2010 to 28 percent in 2024—as an indicator of weakening capacity to meet external obligations.
According to her, debt risks remain elevated, with several countries already in or at high risk of debt distress, underscoring the growing strain on public finances.
Semereta also pointed to renewed geopolitical tensions and their impact on African economies through rising energy prices, disrupted trade routes, and increased financial volatility, which are contributing to inflationary pressures and exchange rate instability.
Highlighting Ethiopia’s experience, she said the country is implementing a comprehensive reform program aimed at restoring macroeconomic stability and strengthening resilience.
These reforms include transitioning toward a market-based foreign exchange system, strengthening monetary policy, enhancing domestic revenue mobilization, and improving transparency in debt management.
She noted that the measures are beginning to yield positive results, with inflation moderating, exports expanding, reserves improving, and fiscal space gradually recovering.
The State Minister also disclosed that Ethiopia has secured over 3.5 billion U.S. dollars in debt relief under the G20 Common Framework, while continuing engagement with private creditors.
She stressed that debt sustainability should be assessed not only by the size of debt but also by its structure, foreign exchange backing, and the credibility of policy frameworks.
Calling for collective action, Semereta outlined four key priorities: reducing borrowing costs through fairer global credit rating systems, strengthening domestic and regional financial markets, expanding access to concessional financing, and enhancing debt management capacity and transparency.
She emphasized that improving transparency and strengthening institutional capacity are critical to reducing risk perceptions and lowering borrowing costs.
“Africa’s debt challenge is real, but it is also manageable, if addressed collectively and strategically,” she said, urging stakeholders to translate dialogue into concrete action.
The forum, which runs from May 6 to 8 in Addis Ababa, brings together policymakers, financial experts, and development partners to explore solutions for enhancing fiscal space and promoting sustainable debt management across the continent.