Fitch trims Ethiopia

Fitch Ratings said it downgraded Ethiopia's long-term foreign-currency issuer default rating to CCC- from CCC.

Fitch typically does not assign outlooks to sovereigns with a CCC rating or below. The agency also removed the long-term issuer ratings from under criteria observation.

“The downgrade of Ethiopia's LT FC IDR to CCC- reflects the lack of identified external financing necessary to meet substantial external financing gaps, along with a material decline in Ethiopia's external liquidity. This is balanced against the November 2022 peace agreement reached in the Tigray War, which will improve the medium-term macro and fiscal outlooks; the expected easing of global supply chain constraints, which will help to ease inflationary and external pressures; and the improvement of public debt metrics,” the agency said in a press release.

Fitch sees a “significant risk of a default,” that may result from the government participating in the G20 common framework debt relief program.

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