Assessment of Public Debt Management Practice in Ethiopia

No Thumbnail Available

Date

2014-06

Journal Title

Journal ISSN

Volume Title

Publisher

Addis Ababa University

Abstract

Ethiopia’s external debt stock has risen rapidly and has almost quadrupled even if debt relief was granted under the Heavily Indebted Poor Countries /Multilateral Debt Relief Initiative (HIPC/MDRI) in 2006 and other problems being facilitated. The impact of this debt burden is enormous in economic and human development of Ethiopia which can be observed from the debt overhang. This entails a need for more comprehensive study which rigorously examines public debt management practices in Ethiopia. Hence, the purpose of this study was to assess the debt management strategy and the precise debt management practice of Ethiopia starting from 2002 after Ethiopia restarts debt management practice from ground due to the debt relief and debt cancellation granted by various multilateral and bilateral creditors up to 2011. The research employed a descriptive research analysis which involves both quantitative and qualitative tools to drive concrete findings. In order to extract the necessary information for the study, document review was considered as the major tool for secondary data gathering while primary data was gathered through key informant interview with directors and managers of debt management unit in the Ministry of Finance and Economic Development. In visualizing the major components of Ethiopia’s debt management strategy the main objective focuses on debt sustainability analysis and gives less attention to parts of debt management strategy such as, fiscal, legal, institutional and operational measures. Despite the efforts in debt management activities, it is still at nascent stage and not performing at its maximum potential. The major challenges faced by debt management practices includes; shortage of human labor force, minimum skills of negotiating teams as well as those who engaged in monitoring and evaluation process, lack of debt management strategy, inaccessibility of alternative creditors to make a choice, late disbursement made by creditors after loan agreement signing, the inability of the government to fund expenditures from treasury and non existence of past performance evaluation process. According to the debt management directorates study, even if Ethiopia’s debt is affordable, the time to time plan of the government necessitating large amount of finance may put risk on future debt capacity

Description

Keywords

Ethiopia, Public debt management Practice in ethiopia

Citation