This study is an effort to determine the effect of public external debt on economic growth inrnEthiopia. Specifically, the study tries to answer the questions whether stock of public externalrndebt and public external debt servicing has any significance effect on economic growth of therncountry and it also determined the magnitude of the effect. In doing this, the study used an AutornRegressive Distributive Lag model (ARDL modeling) to analyze Ethiopian data from 1981 torn2014 with GDP per capita as a function of stock of public external debt, public external debtrnservicing, human capital, physical capital, labor force, trade openness and policy changerndummy. The empirical result reveals that in the long-run high level of stock of public externalrndebt has a significant negative effect on economic growth and it poses great challenges on therneconomy. Therefore there is an evidence for the â€œDebt overhangâ€ and â€œConventional viewâ€ ofrnpublic debt in Ethiopia. On the other hand public external debt servicing has a negativerncoefficient but insignificant in affecting economic growth and there is no evidence for thernâ€œCrowding outâ€ effect in the country. In the long-run result, human capital is also found to havernnegative impact on GDP per capita. Moreover, Labor force has a significant positive impact butrnprivate capital formation and trade openness are insignificant in explaining the Ethiopianrneconomy. Hence, this study recommended the government of Ethiopia and local policy makersrnto improve the existing policies on public external debt management such as to invest inrnproductive activities and sectors, to implement structural change, public sector reform and taxrnreform, should try to minimize the dependence on external borrowing through diversifying therneconomy so as to generate more revenue in the domestic.rnKey phrases: Public external debt, Public external debt servicing, ARDL and economicrngrowth.