Assessment Of Public Debt Management Practice In Ethiopia

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

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