Fitch has downgraded Ethiopia’s rating as a result of a significant decline in liquidity and substantial financing shortfalls, which have heightened the risk of a potential default. This is the second time Ethiopia’s credit rating has been downgraded since September 2023. Two months ago, Moody, another credit rating agency, downgraded Ethiopia’s foreign currency rating from ‘Caa2’ to ‘Caa3’. Although the official creditor committee convened in September 2021, there has been no publicly acknowledged agreement reached regarding Ethiopia’s debt treatment. Fitch highlights the rise in domestic financing costs as a notable concern.
