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The Impact Of External Debt On Economic Growth In Ethiopia


<p><em>A group of low-income countries classified as HlPCs have continued to experience difficulties in managing and servicing their huge stocks of external debt. Most of these countries including Ethiopia are in sub-Saharan Africa. The relatively high level of Ethiopia&#39;s external indebtedness and rising debt burden has serious implications on the country&#39;s development and debt sustainability initiatives. While the economic performance continue to deteriorate, there have been significant net outflow of resources to meet the debt obligations. The study pin downs vital role of the emerging field of external debt and debt indicators in the Ethiopian economy with emphasis on empirical relationship of external debt and economic growth over the period 1963/64-2003/04. In doing so, this paper examines the magnitude and structure of the country&#39;s external debt, and its impact on economic growth across its three economic regimes. Using time series data for the same period, the empirical results indicated that past external debt accumulation has a negative impact on economic growth. Debt servicing also appears to affect economic growth adversely. Several policy implications emerge from the study. The simultaneous attainment of sustainable levels of economic growth and external debt appear difficult at the moment and could remain elusive if aggressive measures are not undertaken. The results obtained from this study support the need for Ethiopia to be considered for comprehensive debt relief measures. In addition, creating credibility including political will to reforms is required to spur investor confidence for both local and foreign investments.</em></p>

Corporate Author: 
Getnet Alemu and Getachew Yoseph (Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Ethiopian Economic Association (EEA)
Primary Descriptors: 

<p>external debt</p>

Secondary Descriptor: 

<p>Debt, Economic GROWTH - 1963-2004</p>

Geographic Descriptors: 
Cataloge Date: 
Broad Subject heading: 
Call Number: 
330.963 PRO 2007
Serial Key Title: 
Proceedings of the Fourth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Publication date: 
2013-05-27 00:00:00
Forum or Discussion date: 
2013-02-27 00:00:00
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Current frequency: