Beset by economic difficulties, Ethiopia's first days as a new member of BRICS were not easy.
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| The weakening world economy, the consequences of the Covid-19 pandemic, climate change, the special military operation in Ukraine and the conflict in the Middle East are affecting Ethiopia. (Source: DW) |
Just before the New Year 2024, bad news came to Ethiopia when the government in Addis Ababakhi was unable to pay $33 million in interest on international government bonds.
At the end of 2023, the Ethiopian Ministry of Finance said that it had made efforts to renegotiate bond terms before the interest payment deadline. However, the parties failed to reach an agreement on extending interest payments and dividing payments for the country's $1 billion bond debt. The debt is expected to mature in December 12.
Currently, the African country is in the process of negotiating an aid package with the International Monetary Fund (IMF) to stem the country's recession.
Will the economy get back on track?
In August 8, the Group of Leading Emerging Economies (BRICS) announced that it had admitted 2023 new members: Egypt, Iran, United Arab Emirates (UAE), Saudi Arabia and Ethiopia on September 5, 1. January 1, 2024.
At that time, Ethiopian Prime Minister Abiy Ahmed happily shared: "This is an important moment for Ethiopia, the BRICS leaders have approved for us to join the bloc. Ethiopia is ready to cooperate with all parties for a prosperous and inclusive world order.”
Joining BRICS offers a glimmer of hope in Ethiopia. Ethiopian Finance Minister Ahmed Shide told Chinese state television CGTN that this move is an important diplomatic benefit for the country.
He affirmed: “Ethiopia will continue to cooperate with traditional partners. But the country will also significantly improve relations with new partners – such as countries in the BRICS – whose economies are growing rapidly.”
“The decision to admit Ethiopia as a new member of BRICS came as a surprise!” – DW Write.
In predictions about potential candidates to join the group, Ethiopia is rarely mentioned. Instead, there are famous names like Saudi Arabia, UAE, Iran, Argentina, Algeria...
Susanne Stollreiter, head of the Friedrich Ebert Foundation (FES) in the capital Addis Ababa, said the country had factors that played a decisive role in joining BRICS. Ethiopia is very important from a geopolitical point of view. This country has the second largest population in Africa, so the economy has the potential to grow strongly in the future.
International media also assessed that, since the early 2000s, Ethiopia has achieved impressive annual GDP growth rates (average of over 10%), making this country one of the fastest growing countries in the world. the world's highest.
Thanks to its “unprecedented” growth rate and growing strategic importance in the region, Ethiopia has become an emerging “giant” in East Africa. The country has developed strong economic ties with China in recent years. Meanwhile, Indian companies are actively buying land in Ethiopia.
However, first, according to Susanne Stollreiter, the country must solve its economic problems. Ethiopia is on the brink of default, with a shortage of foreign currency and rampant inflation. This is harming the people.
The weakening world economy, the consequences of the Covid-19 pandemic, climate change, the special military operation in Ukraine and the conflict in the Middle East are affecting Ethiopia.
Analyst Stollreiter expects that Ethiopia's efforts to connect with the world will bring the economy back on track by expanding trade and promoting relations with trade and investment partners.
Financial support from BRICS
One of the founding ideas of BRICS was to combat Western dominance in international financial policy. Nearly 10 years ago, they started the New Development Bank (NDB) as an alternative to international organizations including the World Bank (WB) and IMF. As the NDB grows, Ethiopia can benefit from new forms of financing.
Expert Lukas Kupfernagel, head of the Ethiopia office of the Konrad Adenauer Foundation (KAS) observed, This could help the African country escape its dependence on meeting conditions imposed by the West to receive credit from the IMF and completely change the situation.
Meanwhile, Mr. Seife Tadelle Kidane from the University of South Africa also believes that the NDB has the ability to push BRICS forward. With the bank's financial support, countries can build infrastructure to promote growth and stability.
But he also warned: “There is no such generosity in international politics and economics. Every country is taking care of itself. Ethiopia should be flexible.”
