The growth rate of government guaranteed loan has significantly shrunk after the Ministry of Finance and Economic Cooperation (MoFEC) places a new scheme and preconditions on providing guarantee for loans particularly from overseas.
A couple of years ago the country external debt has grown to moderate level alarming the government to see options to run pubic projects in other options including public private partnership than the usual trend.
One of the new measures that the government takes is to suspend commercial or non-concessional loan and stick on concessional loan, which has better grace period and low interest rate.
Haji Ibsa, Public Relation head of MoFEC said that the usual trend to provide guarantee for a loan for public projects has been reframed as of this budget year.
He said that this is applied after the country’s debt move to moderate level. He said that all public enterprises except Ethiopian Airlines and Ethio Telecom need a guarantee from the government. However the two enterprises does have access to loan without government guarantee.
The new directive applied two years ago reframed the rate of providing guarantee for public project, according to Haji. “We have to learn from the experience of sugar and other projects that are delayed for a longer period,” he said.
MoFEC’s Public Sector Debt Statistical Bulletin issued in December 2017 indicated that the country outstanding external debt has reached USD 24.22 billion as of the third month of the current budget year.
From the stated amount the debt secured via government guarantee is over USD 7.11 billion, while the growth trend has significantly reduced compared with the preceding period.
In the 2016/17 fiscal year the country/government guarantee ratio stood at USD 6.94 billion. From the last year amount the current year rate as of the end of the third month of the fiscal year only grew by USD 169 million.
The government guarantee loan compared with 2015/16 to 2016/17 the latest one is very limited. In the 2015/16 fiscal year the government guarantee debt stood at USD 6.09 billion from USD 4.88 billion in 2014/15.
At the end of 2014 the country has been enjoying the euro bond market for the first time by accessing USD 1 billion. The USD 1 billion 10-year bonds will be priced to yield 6.625 percent, at the lower end of the 6.625 to 6.75 percent price guidance. The finance secured from the bond has been targeted to develop the public projects like industry parks and sugar projects that would have quick hard currency return, while most of the projects did not come to completion as expected.
For instance the Hawassa Industry Park which was completed with little delay has enabled to attract some prominent garment and textile industries but its operation is not as per the expectation. On the other hand the many sugar projects across the country are delayed.
For the budget year the government allocated 16.97 billion birr for settlement of loan. So far in the past nine months 11.85 billion birr was paid and the balance 5.3 billion birr will be settled in the coming months of the budget year.

Prime Minister Abiy Ahmed (PhD) will head to Kenya for his third overseas visit today. He also took part in the discussion with Bale Robe, Oromia Regional State, residents on Saturday. The Prime Minister is expected to held talks with President Uhuru Kenyatta on bilateral issues today, Sunday May 6.
In his two visits to Djibouti and Sudan the PM also managed to clinch major economical and diplomatic achievements.
On his first foreign visit PM Abiy arrived in Djibouti, the major economic ally in the region, on Saturday April 28. On his two days visit in Djibouti he agreed to develop Djibouti port.
In August Capital reported that a delegation comprised from Metals Industry Development Institute of Ethiopia (MIDI) paid a visit to Djibouti to asses for a port facility dedicated to Ethiopia.
The delegation visited a site at Obock town, located on the northern shore of the Gulf of Tadjoura.
At the time the then Minister of Transport told Capital that the studies that are being undertaken will cover the establishment of ports in partnership with the government of Djibouti.
It is also reported that the two countries may swap some of their public enterprises including the likes of Ethiopian Airlines and Ethio Telecom among others. A joint commission is expected to undertake the details of the agreement.
Djibouti is aggressively expanding its logistics infrastructure to absorb the growing demand of Ethiopia and on the target to be most preferable logistics and cross continental cargo hub in the continent.
Recently, the port centre terminated its management contract with one of the biggest port operator DP World. At the same time Ethiopia bought a 19 percent stake on the port at Berbera, Somaliland, the self-declared nation. It is recalled that last year DP World has taken the major stake at Berbera Port with a 30 year management contract and development of port and related facilities.
Currently Ethiopia and Djibouti have various social and economic co-operations and stated as an example for regional integrations in the continent. They are linked with optical fiber cable, electricity, water and modern electrical railway and have agreed with several upcoming projects including the construction of natural gas pipelines and facilitate joint customs facility in addition to open school for Ethiopian community in Djibouti city.
In another visit from Wednesday May 2 to 3, the PM met with Omar Hassan al-Bashir, President of the Republic of Sudan.
During their meetings the two countries agreed to jointly develop port facilities along the red sea coast in Sudan as an alternative logistics outlet for Ethiopia.
The two countries formed joint commission for year that is working to integrate the two nations on economic areas and border trade.
The feasibility study for the trans-boundary special economic zone was also proposed for financial support for the feasibility study for the African Development Bank (AfDB). The joint project office for trans-boundary special economic zone is formed in Ethiopia.
The economic zone will include massive infrastructure such as port, railway and corridor developments. One stop border, bank, customs and free trade are some of the issues that will be included on the joint plan.
The two countries also agreed to connect via railway and turning the town of Assosa, capital of Benshangul Gumuz region, into a commercial centre.
Abiy is expected to manage similar deal with his counterpart in Kenya.

Eastern African countries average per capita income reached 740 USD in 2016, double the figure ten years earlier, according to a report by the United Nations Economic Commission for Africa (UNECA).
According to new ECA report entitled Macroeconomic and Social Developments in Eastern Africa 2018, despite the marked improvements, growth in the region is still fragile. In particular, the development of the manufacturing sector in Eastern Africa has been lagging behind, limiting job creation and holding back technological progress.
The report states that the economic performance of Eastern Africa has been impressive in recent years, with an average annual growth rate of 6.5 percent between 2012 and 2016 – much higher than the African average and even outpacing East Asia. The people of the region live longer and healthier, receive better education, and enjoy an improved quality of life compared with just a generation ago. The report further states that these positive results are largely attributable to increased state capacity, as governments in the region have rebuilt their institutions after the ‘lost decades’ of the 1980s and 1990s. Where state action has been effective, improvements have been largest.
Despite the positive developments, there are a number of challenges looming on the horizon. Amid the severe drought conditions which afflicted parts of the region, Eastern Africa recorded a marked moderation in its economic growth in 2016, down to 5.5 per cent from 7.1 per cent in 2015. According to UNECA estimates, regional economic growth was little changed in 2017 (at 5.5 per cent), with a modest acceleration to 5.9 per cent being forecast for 2018.
The report notes that other than in Ethiopia, which has implemented an ambitious programme of export-oriented industrial parks, government policies have not thus far managed to promote robust growth in the manufacturing sector.
Another important theme highlighted in the report is the need to improve the business environment in Eastern Africa. Private sector development has been relatively lackluster and the bulk of productive investments are still accounted for the public sector.  Growth would be stronger and more resilient if policies were implemented to bolster private sector activity, the report argues.
“Albeit from a very low base, this is the result of sustaining rates of economic growth considerably higher than African or global averages over the period” says Andrew Mold, Acting Director the Office for Eastern Africa of ECA.
“We should not fool ourselves – the region still needs to confront some serious developmental challenges if it is to attain the Sustainable Development Goals in 2030  – but in general the people of Eastern Africa now live longer and healthier, receive better education, and enjoy an improved quality of life compared with just a generation ago”, stressed Mold.
The Eastern Africa region comprises: Burundi, Comoros, D.R Congo, Djibouti, Ethiopia, Eritrea, Kenya, Madagascar, Rwanda, Seychelles, Somalia, South Sudan, Tanzania and Uganda.

The Federal Ethics and Anti Corruption Commission (FEACC) expressed its distress with lack of adequate office facility after it moved out of their old office located around the area commonly known as Lagar.
The commission that moved to a building located behind Hilton Hotel on Tito Street, claimed that it is unable to properly manage its operation and file the documents of the registered asset of public officials.
On the 14 the Executives National Anticorruption Coalition meeting held at the Sheraton Addis, participants and officials of the commission frequently expressed their concern about the challenge that the commission faces.
One of the participants that represent one organization stated that it has to be clear whether the government wanted this organization to continue or not.
Since November last year the commission moved to its new office after the newly established Government Housing Corporation took over its building that uses to house the commission since its establishment.
“They are the owner of the building, but the commission has to have a proper facility to operate its activity normally,” one of the participants said.
Ayelign Mulualem, Commissioner of FEACC, who comes to the position in November, told Capital that his organization expressed its concern to the relevant government offices like the Office of the Prime Minister and Ministry of Finance and Economic Cooperation (MoFEC). “The current PM is new for the post but we have expressed our concern for MoFEC strongly,” he added.
“We have several documents related with asset disclosure and registration that do not get proper storage area,” he said.
Ayelign who was chief administrator of the North Gondar Zone and head of Health Bureau of the Amhara Region, said that one of the missions of the commission is creating awareness to fight corruption, however there is no proper venue to give trainings for different segment of the public.
“Currently our commission has several responsibilities at the continental and international stages but we could not host our guests from abroad at our office,” the Commissioner said. “If we hosted them in this facility it is a bad image for the country and it may give an image that the government do not give proper attention for fighting corruption,” he says.
The problem has forced the commission to host guests at hotels.
Officers at the commission said that part of the equipment of FEACC still remains in the previous building. The Commissioner argued that the current building of FEACC was not constructed for office purpose. He said that it was built for shop and residential facilities, which makes it difficult for them.