Ethiopia’s nominal GDP, measured in US dollars, fell drastically from $207 billion in June 2016 E.C. (2024 G.C.) to $100 billion by September 2017 E.C. (2024 G.C.), according to the Ministry of Finance’s quarterly government debt report. This significant decline is attributed to the introduction of a market-based foreign exchange trading system in Hamle 2016 E.C. (July 2024 G.C.).
The revaluation of the Ethiopian birr led to a sharp reduction in the country’s GDP when converted to dollars. The GDP figure, which stood at $207 billion a month before the currency adjustment in Sene 2016 E.C. (June 2024 G.C.), dropped to $100 billion within three months.
As a result of these changes, Ethiopia’s total public debt-to-GDP ratio rose from 32.9% in June 2016 E.C. (2024 G.C.) to 50.3% by September 2017 E.C. (2024 G.C.). The government’s external debt grew from $28.8 billion to $31 billion during this period, fueled by the exchange rate adjustment and new loans totalling $1.6 billion from the International Monetary Fund (IMF) and the World Bank.
The report highlights that the external debt stock increased by 7.5%, and the external debt-to-GDP ratio more than doubled, rising from 13.9% in June 2016 E.C. (2024 G.C.) to 30.9% by September 2017 E.C. (2025 G.C.). This exceeded the 30% ceiling recommended by the IMF and the World Bank for low-income countries.
Similarly, the domestic debt-to-GDP ratio also surpassed the set thresholds. However, the government’s domestic debt in dollar terms saw a significant decline following the revaluation. Although domestic debt increased slightly from 2.29 trillion birr in June 2016 E.C. (2024 G.C.) to 2.3 trillion birr, its dollar equivalent dropped from $39.9 billion to $19.8 billion due to the foreign exchange rate adjustment.
These developments underscore the profound impact of currency revaluation on Ethiopia’s macroeconomic indicators, particularly its debt levels and GDP measurements.
