S&P cuts Ethiopia

S&P said it downgraded Ethiopia’s long-term foreign- and local-currency sovereign credit ratings to B- from B and placed all its ratings on CreditWatch with negative implications.

“Ethiopia’s external balance sheet has substantially weakened in recent years due to persistent current account deficits. We expect the country’s external debt (net of liquid external assets) will increase to above 275% of current account receipts through 2024, compared with about 115% in 2014,” S&P said in a press release.

The agency noted the country plans to restructure its bilateral sovereign debt under the G20’s common framework and could also seek debt relief from commercial creditors.

The CreditWatch placement reflects the risk that Ethiopia might include commercial creditors in its government debt restructuring plans, the agency said.

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