Which African countries are highly indebted? How do Horn of African economies fare in this regard? Where does Ethiopia rank compared to her peers?
A Debt-to-GDP ratio is the common tool used to measure the level of indebtedness of a country. Though there is no consensus on an optimal level, a debt-to-GDP ratio of 60% is often cited as a prudential limit for developed countries. For developing and emerging economies, 40% is the suggested debt-to-GDP ratio that should be sustained on a long-term.
Here below are two lists: The data for African nations in general and for East Africa in particular based 2013 data. [You may read brief explanations on technical terms at the bottom]
* Ethiopia is at 40th place with a an external debt to GDP ratio of 18.3 at 2013.
* Countries with comparable GDP size to Ethiopia such as Kenya (30.5%), Côte d’Ivoire (45.6%), Sudan (63.9%), Tunisia(55.9) and Ghana(29.3); all have higher external debt as a percentage of their GDP.
* Ethiopia’s Debt to GDP ratio for 2014 is estimated to be 20%.
The country with a higher external Debt to GDP is at the top of the list (Mauritania 101.9%) and the least debtor is placed at the bottom (Algeria 1.6%)
|No.||Africa||%of GDP||No.||Africa||%of GDP|
|5.||Sao Tome||65||31.||Burkina Faso||22.5|
|13.||Côte d’Ivoire||45.6||39.||Congo, DR||20.3|
Technical terms and notes
*External Debt: External Debt (total outstanding debt) is the amount, at any given time, of disbursed and outstanding contractual liabilities of residents of a country to non-residents to repay principal, with or without interest, or to pay interest with or without principal. It is the sum of public and publicly- guaranteed short and long-term debt, private non-guaranteed short and long-term debt and the use of IMF credit.
*The data is calculated by level of external debt As a percentage (%) of GDP (Debt-GDP-Ratio)
*The data used here is of 2013 and sourced from African Statistical Yearbook 2014 published by the African Statistical Coordination Committee (AfDB, AU, ECA).
*Ethiopia’s peer/comparable economies are selected based on their GDP (at current market prices size and PPP valuation)