Oromia Bank has announced a significant increase in its loan reserves, reaching over 43 billion birr. The bank reported the disbursement of new loans totaling more than 1 billion birr in the last fiscal year, contributing to this impressive figure.

In its annual report for the fiscal year 2023/24, Oromia Bank revealed that its total revenue climbed to 9.5 billion birr, reflecting an increase of 1.01 billion birr compared to the previous year. Despite facing challenges such as supply disruptions, rising commodity prices, and increased costs associated with opening new branches, the bank has managed to maintain robust growth.

Teferi Mekonnen, CEO of Oromia Bank, noted that the costs associated with opening 176 branches over the past two fiscal years, combined with stringent monetary policies, hindered the bank from achieving its projected results. He stated that the bank’s total capital has risen to 9.5 billion birr while expenditures for the current fiscal year reached 8.5 billion birr.

The bank reported a pre-tax profit of 1.01 billion birr for the fiscal year, although this represents a 50% decrease compared to the previous year. At the end of the reporting period, Oromia Bank’s interest-free banking wing recorded deposits of 8.15 billion birr, marking a 4% increase from the same period last year.

During this fiscal year, total deposits surged to 56.42 billion birr, reflecting a growth of 4% compared to the previous year. The report also highlighted that foreign currency (FCY) deposits amounted to $327.2 million, which is a decrease of 12% from the prior year.

The bank’s total expenditures for 2023/24 amounted to 8.5 billion birr, representing a substantial increase of 35% from last year’s total of 6.27 billion birr. This rise in expenses was primarily driven by personnel costs (37.3%), interest expenses (35.4%), other operating expenses (16.8%), amortization of right-of-use assets (4.9%), and depreciation and impairment of property and equipment (2.9%).

Oromia Bank is also making strides in infrastructure development, announcing that construction is well underway for its new headquarters at Goma Kuteba. The structural work has been completed, with approximately 31.33% of the project finished.

Additionally, the first phase of the Gelan Excellence and Convention Center construction project has been completed, with the second phase commencing during the current fiscal year.

The bank has seen significant growth in its digital user base, now reaching 3.77 million customers—a remarkable annual growth rate of 47%. This expansion reflects Oromia Bank’s commitment to enhancing its digital services and improving customer engagement.

The public will soon have the opportunity to visit the newly refurbished National Palace, a project resulting from a collaboration between the public and private sectors. This revitalization includes several tourist attractions, such as a luxurious hot spring spa, and will be open after Ethiopian Christmas.

Thanks to financial and technical assistance from the French government, the palace—originally built in 1955 and named Jubilee to honor Emperor Haile Selassie I’s Silver Jubilee—has undergone significant renovations over the past five years.

The palace, managed by Unity Park, which also oversees the Grand Palace of Menelik II, is set to open after Gena (Ethiopian Christmas) on Tuesday, January 7, according to information obtained by Capital from the Office of the Prime Minister (OPM).

Covering over 27 hectares, the National Palace is located in the heart of Addis Ababa, directly opposite the Economic Commission for Africa and near the Filwuha hot spring.

The palace has welcomed numerous notable international figures, including French President Charles de Gaulle and Yugoslavian President Josip Broz Tito. It now hosts a variety of tourist attractions, including the emperor’s collection of luxury cars and train wagons.

According to data obtained by Capital from OPM, Emperor Haile Selassie amassed over 80 limited edition and vintage luxury cars as gifts and purchases.

Alemtsehay Paulos, Minister of Cabinet Affairs and Head of the Prime Minister’s Office, noted that the museum within the palace’s main building will feature a number of priceless artifacts.

She added that additional items will be stored in four warehouses constructed on the property as part of conservation and restoration efforts, stating, “The display may include only up to two percent of the emperor’s collections.”

“The private sector development scheme was a key component of the renovation work,” she explained.

For example, Debabe Coffee Garden invested 110 million birr to renovate one of the compound’s oldest buildings, offering guests a selection of Ethiopian coffee.

The property also includes several dining options and a clothing store.

Among the facility’s main features is a wellness center, built on the western side of the estate, covering a total area of 8,000 square meters.

The facility, which cost 1.38 billion birr to complete in less than five months, will provide VIPs with a variety of spa services utilizing the local natural hot spring.

The Ethiopian government has allocated a substantial, undisclosed amount for the rehabilitation, primarily to construct the car display facility, while the French government has contributed 25 million euros towards the renovations.

According to OPM, tourist revenue from Unity Park has been used to fund government expenses. Although the exact entrance fee has not been disclosed, it is expected to be significantly higher than the current charges at Unity Park.

Mycetoma, a neglected tropical disease, poses a significant health threat to many individuals in Ethiopia, particularly in impoverished and rural areas. Characterized by chronic wounds and severe deformities, mycetoma can have devastating health and financial impacts on those affected. However, the extent of this disease remains poorly understood due to a lack of comprehensive data.

Wendemagegn Enbiale, an expert on mycetoma, emphasizes the urgent need for awareness and research regarding the disease’s prevalence in Ethiopia. To better understand the situation, a national survey was conducted in 2022 that reviewed hospital records from 13 hospitals across the country for cases of mycetoma and similar diseases from 2015 to 2022. The findings revealed that mycetoma is present in almost every region of Ethiopia, with the highest incidence reported in the northern regions of Tigray and Amhara. These two regions accounted for over two-thirds of reported cases, despite comprising only about a quarter of the country’s population.

In comparison to neighboring Sudan, where over 9,600 cases have been reported over 30 years, Ethiopia recorded only 143 cases in five years. This disparity suggests that many cases may go unreported or misdiagnosed, highlighting the need for further community-based studies to accurately assess the scale of the problem.

Patients with mycetoma typically first notice a persistent wound that does not heal and gradually enlarges over several years. The affected area may swell and ooze discharge from multiple spots. While the foot is the most commonly affected site, mycetoma can also manifest on the hands, back, or buttocks, potentially damaging skin, deeper tissues, and even bones.

A distinctive feature of mycetoma is pus containing grains that may be black, white, yellow, or red. Most affected individuals are farmers who work barefoot, increasing their risk of infection from contaminated soil.

The impact of mycetoma extends beyond physical health; it significantly affects the financial stability and social well-being of those infected. The disease primarily impacts individuals in their working years—farmers, daily laborers, and wood collectors—who often lack protective footwear or gloves. When fungus enters through cuts or injuries, the disease can spread slowly if not treated early.

Many patients face barriers to accessing healthcare due to financial constraints or geographic distance from medical facilities. The disease is often not painful initially, leading to delays in seeking medical help. However, untreated mycetoma can result in severe complications such as chronic discharge and deformities that hinder patients’ ability to work.

Cultural beliefs and attitudes significantly influence treatment outcomes for mycetoma patients. Many individuals are unaware of the disease’s seriousness and often resort to home remedies instead of seeking professional medical help. Education about mycetoma is crucial; communities need to understand that it does not heal on its own and that proper treatment—which can take up to a year—is essential for recovery.

Ethiopia’s Health Extension Program offers an effective platform for educating communities about mycetoma. Strategies could include teaching the importance of wearing shoes and seeking early treatment for wounds and training healthcare workers to recognize signs of mycetoma and refer patients appropriately.

Mycetoma remains a significant public health challenge in Ethiopia that requires concerted efforts from healthcare providers, policymakers, and researchers alike. Addressing this neglected tropical disease involves improving awareness, enhancing diagnostic capabilities, and ensuring access to effective treatments.

In a startling development that has sent shockwaves through Ethiopia’s economic landscape, public sector debt has surged to more than half of the country’s Gross Domestic Product (GDP) following a fresh influx of funding in the first quarter of the fiscal year. This alarming trend raises questions about the sustainability of Ethiopia’s financial health and the implications for its citizens as the government grapples with mounting fiscal pressures.

In the past three months, the government sold Treasury bonds totaling 15.8 billion birr to banks.

According to the Ministry of Finance’s (MoF) debt bulletin, approximately USD 1.6 billion was issued in the first quarter of the 2024/25 budget year, representing a 20% increase over the total amount disbursed in the entire 2023–2024 budget year.

A MoF study published a week ago revealed that, as of September 30, public sector debt—both external and domestic—accounted for over 50.3% of nominal GDP.

The external debt now represents 30.9% of the total, having increased from 13.9% of GDP as of June 30.

The MoF report indicates that both the external and total debt percentages exceed the debt sustainability criteria for low-income countries, which are set at 35% for total public sector debt in a weak debt-bearing nation and 30% for external debt.

The report noted, “Debt sustainability with export-related thresholds is still an issue.”

Since 2017, Ethiopia’s debt load has been classified as high risk, prompting the government to avoid commercial loans. The country’s low debt-to-GDP ratio has also been affected by minimal new disbursements from bilateral and international partners over the past four years.

It is worth noting that the last time the public debt exceeded half of GDP was on June 30, 2022, when the debt-to-GDP ratio stood at 50.3%. In recent years, the debt has significantly decreased due to negative inflows and high service costs.

At the end of the last budget year, total public sector debt was approximately 32.9% of nominal GDP, with external debt making up over 13.9%. Both figures were well below the debt sustainability thresholds for low-income countries.

Furthermore, the proportion of external debt has surpassed that of domestic loans, a change driven by the macroeconomic reforms implemented post-reform, substantial support from international partners such as the World Bank and the International Monetary Fund (IMF), and the nearly 100% decline in the birr’s value due to exchange rate floating.

The report states that as of September 30, 2024, total public sector debt by source comprised 39% domestic debt and 61% external debt, an increase from 42% external debt as of June 30, 2024.

The government’s stock of foreign debt rose significantly following the major reforms implemented on July 29, which enabled it to secure substantial assistance from international partners.

According to the Ministry of Finance (MoF) report, total external debt rose from USD 28.9 billion on June 30 of last year to USD 31 billion on September 30, 2024.

The report noted, “Disbursements during this quarter were significantly higher compared to principal payments, resulting in a 7.4% increase in debt between the two periods, which can be partially attributed to exchange rate fluctuations.”

The International Monetary Fund (IMF) and the International Development Association (IDA) of the World Bank accounted for the majority of the over USD 1.7 billion in foreign public sector debt disbursements during the reported three-month period. This amount represents a 120% increase compared to the funding distributed in the previous full budget year. From July 1, 2023, to June 30, 2024, external public sector debt disbursements totaled USD 1.4 billion.

Debt Relief

The administration has expressed its strong expectation that macroeconomic reforms will facilitate debt repayment rescheduling through the G20 communique on the Common Framework (CF) and with private creditors.

Debt restructuring negotiations under the CF have been ongoing for the past four years. The agreement is expected to be finalized by December; however, the New Year has begun without further developments.

The administration stated that a significant amount of debt re-profiling would accelerate macroeconomic transformation.

According to MoF documents, the government estimates that the residual financing gap of USD 10.7 billion for the 2024/25–2027/28 program will be addressed with “USD 3.4 billion from the IMF, and a budget of USD 3.75 billion from the World Bank, which has been approved in July.”

It also noted that financing related to debt treatment under the CF would cover the remaining USD 3.5 billion deficit.

The MoF bulletin reminded readers of the substantial short-term relief provided by the debt service standstill arrangement with the members of the Official Creditor Committee.

The projections include re-profiling USD 1.4 billion in debt payments owed to all official bilateral creditors in 2023 and 2024. However, the expected USD 3.5 billion in debt treatment under the Common Framework brings the total debt relief to USD 4.9 billion.

“The forecasts incorporate re-profiling of debt payments of USD 1.4 billion due to all official bilateral creditors in 2023 and 2024. However, the debt treatment under the Common Framework is estimated at USD 3.5 billion, resulting in a total of USD 4.9 billion in debt relief,” the report stated.

Domestic Debt

Following the reform of the foreign exchange market, which is now market-governed, the total domestic debt in USD has decreased from 40 billion to over 19.8 billion.

As of September 30, 2024, the total domestic and foreign public sector debt fell by 26.11 percent, reaching USD 50.8 billion, down from USD 68.8 billion on June 30, 2024, due to changes in the exchange market.

The use of a market-determined exchange rate for converting domestic debt from birr to USD has resulted in a 7.4% increase in public sector foreign debt, while domestic debt has decreased by 101.3% in USD terms, according to the Ministry of Finance (MoF) report.

To manage the repayment of domestic debt, the government has examined various debt profiles as part of the reform process.

Consequently, the central government now controls over 98% of the total domestic debt, which was previously held by state-owned enterprises.

To facilitate this transition, the government issued 845.3 billion birr in 10-year government securities to settle the 263.3 billion birr debt owed by Ethiopian Electric Power and the 582 billion birr claims from the Commercial Bank of Ethiopia (CBE) against the Liability Asset Management Corporation.

During the review period, the government restructured Treasury bills held by the Private Organization Employees’ Social Security Administration (POESSA) and the Public Servants Social Security Agency (PSSSA) into 10-year government bonds.

According to the statement, “this is due to the restructuring of PSSSA’s Treasury bills amounting to 176.8 billion birr and 89.5 billion birr of POESSA.”

As a result of this restructuring, the total outstanding Treasury bills decreased from 447.8 billion birr on June 30, 2024, to 125.6 billion birr on September 30, 2024.

Following the 2022 directive No. MFDA/TRBO/001/2022 from the National Bank of Ethiopia, which mandates all commercial banks to purchase a five-year treasury bond at 20% of their new loan disbursements, the stock of these bonds reached 109.6 billion birr by the end of September.

The stock of Treasury bonds increased from 93.8 billion birr at the end of the previous budget year to 109.6 billion birr.

The government announced that the bond established on November 1, 2022, will be phased out by the end of June 2025, while banks are required to purchase 50 billion birr worth of bonds. During the reported period, Treasury bonds increased by 15.8 billion birr.

As of September 30, 2024, there was no balance remaining because the MoF reported that the entire amount of Direct Advance, which stood at 242 billion birr as of June 30, 2024, was converted to government bonds.