Ethiopia Macroeconomic Handbook 2022

Ethiopia
Macroeconomic Handbook 2022
RESEARCH & ANALYTICS

Macroeconomic Handbook 2022
With the conflict in Ethiopia turning out much more prolonged and devastating than
many observers (including ourselves) anticipated, the Ethiopian macroeconomy has—
for over a year now—found itself in a difficult war-time footing, facing immense RESEARCH & ANALYTICS
humanitarian and security costs, as well as a heavy toll in terms of lost social and
physical infrastructure. Heading into 2022, however, conditions appear to be emerging
for the economy to move away from a conflict mode and towards recovery and
reconstruction. In this context, we consider a set of ten questions and concerns
regarding recent economic developments as well as near-term prospects. We also offer
our views on what we see as a plausible baseline macro outlook—including projections
for the real, monetary, fiscal, and external sectors—under that presumed scenario.
Recent Developments
1. Growth: What do various activity indicators reveal about the ‘pulse’ of the Ethiopian economy?
2. Deficits and Debt: Will the conflict push Ethiopia into a debt crisis?
3. Money and Inflation: What is happening to money supply and inflation?
4. Banking: How are banks coping with covid and the conflict?
5. Exports and Imports: Why are both exports and imports rising sharply and for which products/partners?
6. Foreign exchange: How are the volumes and sources of Ethiopia’s foreign exchange flows evolving?
7. Exchange rate: What explains the size and speed of the Birr’s recent movements?
Future Prospects and Outlook
8. Putting it all together: What do recent developments imply for near-term macro policies?
9. Macro Policy Directions: What three main challenges/choices will confront macro policymakers this year?
10. Macro Projections: What are a plausible set of macro projections—and an alternate scenario—for 2022?
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Disclaimer: This report represents solely the views, analysis, and judgement of the Cepheus research team and does not
necessarily reflect the views or opinions of the Fund’s Managing Partners, Advisors, or Investors.
EXECUTIVE SUMMARY:
Recent developments
1. Growth and Recent Economic Activity: The Government recently reported growth of 6.3 percent for FY 2020-
21, but this figure largely reflects conditions before the intensification and geographic spread of the conflict in
July 2021. For the current fiscal year, crop production, tourism, construction, and industry are likely to be heavily
impacted by conflict effects as well as by recent tightening in credit and fx conditions. A set of 25 economic
activity indicators compiled to gauge recent developments show mostly positive trends for 2020-21 but reveal
a lower share of growing indicators—and thus underlying weakness—for the six months ending December 2021.
2. Deficits and Debt: Fiscal policy has been relatively restrained even in the face of shocks that have required
exceptional spending outlays (covid last year, the conflict this year). This has been possible because policymakers
tend to make expenditure cuts to previously budgeted items rather than let the budget deficit balloon out of
control. While we do expect the budget deficit to worsen, this should be only moderately so, or from 2.7 percent
of GDP last year to near 4 percent of GDP, per our estimates. Despite lower foreign funding, the Government
has managed to meet its extra financing needs by turning to domestic sources—the NBE, banks, and pension
funds. External debt service obligations were fully paid in 2021, the Government’s local borrowing costs remain
relatively contained at 8%-10%, and debt ratios are falling slightly—to 50% of GDP—thanks to a rising nominal
GDP. Reflecting these and other factors, fears of an imminent debt crisis are overblown, in our view.
3. Money and Inflation: Monetary policy has (very generously) accommodated the government’s need for
substantially higher domestic borrowing this year, and net credit to the Government—especially from the
central bank—has thus grown at rates not seen in many years. While the Government’s ability to cover its deficit
from mainly domestic sources is positive, this does come at a cost to other parts of the economy—seen with the
decline in growth of credit to the private sector and the sharp increase in Ethiopia’s (already high) inflation rate.
4. Banking: Despite multiple shocks from covid, the conflict, and a challenging regulatory space, the banking sector
has continued to show a strong and resilient performance—reflecting in turn what must be reasonably strong
private sector demand for loans and other banking services. Deposits, lending, and profits were at record levels
across virtually all banks. The most recent six month period brought a more challenging environment (a complete
credit freeze put in place in late 2021, an increase in reserve requirements, and a change in fx surrender rules),
but most banks are well-placed to weather even these recent shocks thanks to a deposit base that is still growing
(though less so than before), healthy lending margins, generally low NPLs, and much improved capital bases.
5. Exports and Imports: Strong export growth has been an unexpectedly positive element of Ethiopia’s
performance both in the face of Covid and throughout the recent conflict. More recently, imports are also
surging (up 24 percent this year) after showing negative growth for most of the past five years. The 20%-plus
growth being recorded for both exports and imports is partly due to exogenous factors (higher coffee/gold prices
for the former, and rising fuel/food/fertilizer prices for the latter). But volume effects have also been significant
(often more so) for multiple export categories such as gold, oilseeds, chat, fruits, vegetables, and electricity.
6. Foreign exchange: Little progress was made in boosting foreign exchange inflows in 2020-21, and this remains
one of the main macro and business bottlenecks within the economy. Fx inflows reached close to $22bn last
fiscal year, not much changed from the levels seen in recent years. Aid-related fx flows (grants, loans) fell by
one-third in 2020-21 but private sector fx inflows (exports, remittances, FDI) more than compensated for that
shortfall. The net fx position of the banking system has declined since the start of the current fiscal year, and a
temporary drop in the NBE’s fx reserve holdings—to just under $2bn—is thus to be expected by June 2022.
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7. Exchange rate: As a managed currency, the Birr’s movements have continued to reflect central bank preferences
for a gradual and controlled depreciation. By contrast, the parallel market rate was more volatile and moved in
tandem with conflict-related sentiments and developments. The Birr has been depreciating at an annualized
rate of 26 percent throughout this fiscal year, virtually the same rate as last year. However, while the rate of
depreciation exceeded the inflation rate for all of last year (thus bringing a welcome real depreciation of the
currency), the situation has reversed this year as depreciation rates are now well below recent inflation rates,
thus potentially contributing to a real appreciation (strengthening) of the Birr if current trends continue.
Future Prospects and Outlook
8. Putting it all together: In distilling the recent record of macroeconomic performance, some key elements and
implications are worth highlighting. First, even with efforts to track a wide mix of indicators on the status of
current macro conditions, there are clearly some unknowns and uncertainties that may be limiting a full view of
the macro picture; thus, the possibility of a more challenging macro situation than appears to be the case cannot
be ruled out. If, for example, the scale of humanitarian spending requirements, or the volume of crop losses, or
the scope of damaged infrastructure is well beyond current indications, then the fiscal/external implications—
and associated set of policy responses—will only become that much more challenging. Second, despite the
uncertainties involved, it can still be said that the macroeconomy has been relatively resilient in the face of
multiple shocks, with recent reforms seeming to have helped in this regard. Third, and irrespective of how one
judges the recent record of macro performance, it is clearly becoming the case that macro policies are (as of
early 2022) making tentative steps to move the economy away from its war-time footing and towards a focus
on recovery and reconstruction; a much more dedicated roll-out and intensified implementation of the Ten Year
Development Plan (TYDP) can thus now reasonably be expected in the immediate period ahead.
9. Macro Policy Directions: With respect to the likely path of macroeconomic policy in 2022, policymakers face
challenging choices in three notable areas: (1) whether to tighten or loosen macro policies, both in the fiscal and
monetary arenas; (2) whether to pursue mainly domestic or mainly external financing sources for reconstruction
spending; and (3) whether to ensure priority resource allocations (most notably of credit and forex) to the public
or private sectors. So far, and understandably so given the circumstances, the policy bias has been towards
loosening rather than tightening, towards domestic rather than external financing, and towards directing
resources (fx/credit) to the public sector rather than private sector. We address how far and how soon we think
there will be a reversal in each of these areas.
10. Macro Projections: Our baseline macro outlook takes the view that a growth slowdown is unavoidable this fiscal
year (given developments in the last six-month period) but that a strong growth bounce back is almost inevitable
next year, conditional on the assumption of a de-escalation in the conflict as well as a gradual return to normalcy
across key economic sub-sectors (farming, commerce, and infrastructure links). Based on this presumed
backdrop, and some other specific assumptions for the macro framework (see Section 10), we forecast:
(1) growth of just 1% this fiscal year followed by 6.5% next year; (2) a very gradual decline in inflation that is only
achieved over the course of the next 18 months; (3) a quick improvement in the fiscal deficit from 4 to 3 percent
of GDP by next year (allowing for continued small reductions in debt ratios); (4) a monetary policy stance that
gradually moves to a somewhat looser position by next year as there is progress on inflation; and (5) an external
position that continues to weaken up to mid-2022 but strengthens substantially thereafter thanks to (what we
expect will be) on-going growth in exports/remittances, a re-launching of the delayed privatization program, and
a closer re-engagement with external donors, lenders, trading partners, and investors.
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Section 1: Growth and Recent Economic Activity
• We review recently released GDP data for 2020-21 as well as an additional set of 25 activity indicators to gauge the
underlying ‘pulse’ of Ethiopia’s economic performance over the past year.
• Among the varied set of economic activity indicators compiled, we highlight areas of positive and negative growth,
while also drawing distinctions between observed nominal vs real growth rates. We further track outturns during
the latest six month period—for those indicators with available data—to capture any notable trend breaks since
the intensification and geographical spread of the conflict starting in July 2021.
• Of the 25 indicators tracked, more than half showed positive real growth during 2020-21 (which ended June 2021),
but this share has dropped notably since then, with only around one-third now exhibiting expansion in real terms.
In an effort to capture the record of recent economic activity in Ethiopia, we compile a set of 25 indicators—beyond
GDP growth—to capture a broad view of economic conditions and performance. These indicators go some ways in
capturing both the positive fruits of policy reform put in place since 2018 while at the same time showing the more
recent consequences of economic shocks faced from COVID and the civil conflict.
• GDP Data for 2020-21: The Government’s recent release of national income statistics reveals real GDP growth
rate of 6.3 percent for the 2020-21 fiscal year that ended in June 2021. Sector growth rates were 5.5% for
agriculture, 7.3% for industry, 6.3 percent for services. These growth figure largely reflect conditions in the
economy before the intensification and geographic spread of the conflict in mid-2021 and it also largely pre-
dates the tightening of financial conditions imposed in subsequent months (including a credit freeze put in
place in the second half of 2021). While some observers may find the reported growth figure questionable, the
data appear to reflect and seem justified by: (1) the very favorable rainy season of 2020-21 (with 8 percent
more rain falling nationwide in 2020-21 compared to the prior year, per meteorological data); (2) the credit-
supported recovery that was in place in 2020-21 for some key sub-sectors (construction, exports, and some
services); and, (3) perhaps most importantly, the fact that the conflict had not widened geographically until
the last days of the fiscal year in end-June 2021. Key elements of the GDP data release are on pages 4 to 6.
• Trends in a set of 25 high frequency indicators, which are released on a monthly or quarterly basis, provide
an additional perspective on the strength or weakness of economic activity in specific segments of the
economy. Our compilation of indicators in this regard covers trends in rainfall, crop output, industrial park
output, FDI, electricity generation, fuel consumption, government revenue, exports, imports, grants, loans,
remittances and more. Among these indicators, we find areas of strength for FY 2020-21 include FDI, credit,
exports, revenue, and remittances, while areas of weakness are seen in cement production, tourism, and
grants. More recently, focusing just on the July-December period, areas of weakness included trends in credit
to the private sector, external loans, and fx reserves. A tabulation of these indicators is in pages 7 to 11.
Overall, our reading of recent economic data suggests to us that: (1) The 2020-21 GDP growth figure appears plausible
as it pre-dates the more intense conflict period that occurred after June 2021 and given our own estimates of real
growth recorded for a sample of 25 activity indicators; (2) There is clearly a slowdown in activity taking place over the
last six months, though its magnitude varies substantially across different sub-sectors; and (3) Some of the rapid growth
rates in key indicators (such as credit to government, monetary variables, FDI) has been real and substantial but—it
must be noted—are reflective of either one-off factors (i.e., privatization) or are not necessarily welcome or desirable
(i.e., rapid monetary growth) as they tend to deliver a short-term boost to economic activity at the expense of what
may be adverse longer-term economic consequences, including most notably higher inflation (see Sections 2 and 3).
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GDP Data: Part 1
• The government’s recent release of GDP statistics shows real GDP growth of 6.3 percent last year, in contrast
to the 3 percent average decline seen across Sub-Saharan Africa last year.
• This reported growth rate reflects strong performance in agriculture (largely rainfall dependent and aided
by various policy initiatives) as well credit-supported recoveries in services (whose growth rose from 5.3
percent to 6.3 percent). Industry showed positive growth but at a lower rate than past norms, likely
reflecting its greater reliance on fx conditions and some conflict-related disruptions.
Figure 1.1A: Real GDP Growth Rates--Ethiopia versus Sub-Saharan Africa Figure 1.1B: Supply Side Real Growth Rates
GDP Growth Rates (Ethiopia Vs Sub-Saharan Africa) Supply Side Real Growth Rates (%)
14.0% 30.0%
13.0%
12.0%
25.0% 24.0%
10.6% 10.3% 10.4%
10.0%
9.6%
20.5% 20.3%
8.6% 19.7% 19.9%
8.0% 8.4%
8.0% 20.0%
6.8% 17.1%
6.0% 6.1% 6.3%
5.4%
4.7% 5.0% 15.0%
4.7%
4.0% 4.0% 12.2% 12.6%
13.0%
2.8% 2.5%
2.0% 2.4% 2.3% 11.1% 11.0% 9.6%
1.2% 10.0% 9.6%
9.0% 8.6% 8.8% 7.3%
0.0%
7.2%
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 6.3%
7.1% 6.7% 5.3%
-2.0% 5.0% 6.4%
5.4% 5.5%
4.9%
-3.3% 3.8% 4.3%
-4.0% 3.5%
2.3%
0.0%
-6.0% 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Real GDP Growth--Ethiopia Real GDP Growth--SSA Agriculture Industry Services
Source:MoPD, WB Source:NBE, MoPD
Figure 1.1C: Demand Side Real Growth (%)
Demand Side Growth

80.0%
67.6%
70.0%
61.5%
60.0%
50.0%
40.0% 45.1% 36.4%
30.0% 27.0% 26.2%

32.6%
20.3%
27.9% 27.7% 17.9%
20.0% 14.5%
20.7% 20.3%
17.6% 17.0% 17.0% 18.5% 9.4%
10.0% 6.6% 16.3% 6.7%
0.0%
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Private consumption Investment
Source:NBE, MoPD
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GDP Data: Part 2
• The investment to GDP ratio has continued to slide for a second year in a row and now stands at 28 percent
of GDP, down from 35 percent of GDP in 2018-19. This appears to reflect a small drop in public investment
alongside a more significant drop in private (and especially domestic) investment. The implication of a lower
investment share in GDP is higher consumption, implying a greater portion of spending by firms, households,
and government is taking place on consumable goods and services rather than on new capital goods.
• The drop in the investment ratio is consistent with other indicators—such as capital goods imports—that
also fell by around 6 percent in dollar terms—last fiscal year. While FDI inflows rose during this period
(boosted in part by exceptional inflows from the telecom license sale), this is a small component of overall
investment and did not offset declines in the other categories.
Figure 1.2A: Investment (% of GDP)
Investment, % of GDP
42.0%
40.0%
39.4%
38.4%
38.0% 38.0%
37.1% 37.3%
36.0%
35.3%
34.0% 34.1% 34.2%
32.0% 32.1%
30.8%
30.0%
28.0% 28.0%
26.0%
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/ 18 2018/ 19 2019/ 20 2020/ 21
Source:MoPD
Figure 1.2B: Private consumption (% of GDP)
Private consumption(% of GDP)

74.0%
73.5%
73.0%
72.4% 72.5%
72.0% 72.2%
71.0%
70.0% 70.2%
70.0%
69.0% 69.0%
68.7%
68.0%
67.0%
66.5% 66.5%
66.0%
65.7%
65.0%
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/ 18 2018/ 19 2019/ 20 2020/ 21
Source:MoPD
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GDP Data: Part 3
• Among the large GDP components, the fastest rates of growth last year were recorded in health care (up
13%), banking (up 9%), transport/communications (up 7%), and construction (up 7%, though at a multi-year
low). Mining was the fastest growing sub-sector both last year and over the past five years, though this is a
reflection of its very tiny initial base (at less than 1 percent of total GDP).
• Given the pattern of recent growth rates, the composition of GDP now shows the construction segment just
as large as the crop sector (both at 21% of GDP), followed by wholesale/retail trade (14%), the livestock
sector (8%), transport and communications (5%), and manufacturing (5%).
Figure 1.3A: Fastest-growing GDP sub-sectors over the past five years
Ranked by Five-year average growth rate
Sectors 2016-17 2017-18 2018-19 2019-20 2020-21 Five-Yr Avg

1 Mining and Quarrying -30% -21% -22% 91% 115% 27%
2 Construction 21% 16% 15% 10% 7% 14%
3 Financial Intermediation 18% 11% 14% 10% 9% 12%
4 Health and Social Work 7% 8% 14% 13% 13% 11%
5 Large and Medium Scale Manufacturing 19% 8% 10% 10% 6% 11%
6 Transport and Communications 15% 6% 21% 1% 7% 10%
7 Small Scale and Cottage Industries 37% 4% 3% 3% 2% 10%
8 Whole Sale and Retail Trade 7% 11% 12% 6% 6% 8%
9 Electricity and Water 12% 10% 4% 7% 9% 8%
10 Public Administration and Defense 13% 9% 9% 2% 5% 8%
11 Real Estate, Renting and Business Activities 4% 6% 8% 10% 9% 7%
12 Crop sector 8% 5% 3% 5% 6% 5%
13 Other Community, Social & Personal Services 5% 5% 6% 3% 2% 4%
14 Hotels and Restaurants 0% 6% 9% 2% 3% 4%
15 Animal Farming and Hunting 4% 1% 6% 3% 6% 4%
16 Forestry 4% 3% 4% 4% 4% 4%
17 Fishing 1% 11% 2% 2% 2% 4%
18 Private Households with Employed Persons 4% 4% 3% 2% 2% 3%
19 Education -3% 4% 4% 2% 2% 2%
Source:MoPD
Figure 1.3B: Compostion of GDP by detailed sub-sector and trends over past five years
Ranked by share in GDP in 2020-21
Sectors 2016-17 2017-18 2018-19 2019-20 2020-21 FIve-Yr Change
1 Crop sector 23.5% 22.8% 21.5% 21.3% 21.1% -2.4%

2 Construction 18.0% 19.3% 20.3% 21.1% 21.1% 3.1%
3 Whole Sale and Retail Trade 13.5% 14.1% 14.3% 14.3% 14.3% 0.8%
4 Animal Farming and Hunting 9.6% 9.0% 8.7% 8.5% 8.4% -1.2%
5 Transport and Communications 5.1% 5.0% 5.6% 5.3% 5.3% 0.2%
6 Large and Medium Scale Manufacturing 4.6% 4.5% 4.7% 4.8% 4.8% 0.2%
7 Real Estate, Renting and Business Activities 4.4% 4.3% 4.3% 4.4% 4.5% 0.1%
8 Public Administration and Defense 4.4% 4.5% 4.5% 4.3% 4.2% -0.2%
9 Financial Intermediation 2.9% 3.0% 3.2% 3.3% 3.4% 0.5%
10 Forestry 3.2% 3.1% 2.9% 2.9% 2.8% -0.4%
11 Hotels and Restaurants 2.6% 2.6% 2.6% 2.5% 2.4% -0.2%
12 Education 2.6% 2.5% 2.3% 2.3% 2.2% -0.4%
13 Small Scale and Cottage Industries 2.4% 2.3% 2.1% 2.1% 2.0% -0.4%
14 Health and Social Work 1.1% 1.1% 1.1% 1.2% 1.3% 0.2%
15 Other Community , Social & Personal Services1.2% 1.2% 1.1% 1.1% 1.1% -0.1%
16 Private Households with Employed Persons 1.0% 1.0% 0.9% 0.9% 0.9% -0.1%
17 Electricity and Water 0.7% 0.7% 0.8% 0.8% 0.8% 0.1%
18 Mining and Quarrying 0.3% 0.2% 0.1% 0.3% 0.5% 0.2%
19 Fishing 0.1% 0.1% 0.1% 0.1% 0.1% 0.0%
Source:MoPD
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High Frequency Indicators Data, Part 1: FY 2020-21 Outturns
• A compilation of 25 high frequency indicators for FY 2020-21 shows a range of growth outturns across
sectors, with around two-thirds showing positive growth (in nominal terms) last fiscal year.
Figure 1.4A High Frequency Indicators for FY 2020-21, Nominal Growth Rates
Foreign investment 64.1%
Credit to Government 56.3%

Credit to Agriculture 50.9%
Money supply (M2) 29.9%
Banks' profits 24.0%
Credit to Construction/Housing 21.7%
Telecom subscriptions 21.6%
Exports 21.1%
Government Revenue 19.6%
Remittances 18.6%
SOE bond issuance 9.8%
Average rainfall 8.4%
Real GDP 6.3%
Imports 2.9%
Electricity production 2.2%
Crop output (CSA) 2.0%
Industrial Parks' Production -2.2%

Fuel consumption -3.8%
Cement production -4.5%
Capital goods imports -5.9%

External grants -17.5%
ECX traded crop volumes -19.3%
NBE reserves -23.2%

Tourist visitors -35.3%
External loans -57.1%
-80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0%
Source: Cepheus Research compiliation based on data from CSA, NBE, MOPD, MOF, ECX, MOTI, EIC, NMA, IPDC, Banks' Annual Reports, press reports.
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High Frequency Indicators Data: Part 2, Implied FY 2020-21 Growth from HFIs
• The 25 high frequency indicators show a simple average growth of 1.5 to 2.2 percent last fiscal year
(depending on the inclusion/exclusion of certain outliers).
• Using an approximate weighted average method in line with GDP computation methods suggests an overall
real GDP growth for these 25 indicators of 4.2 percent, which is somewhat below but not substantially
different from the 6.3 percent official growth rate reported in GDP statistics.
Figure 1.4B: High Frequency Indicators (HFIs): Positive and Negative Growth Cases in both Nominal and Real Terms
2020-21 FISCAL YEAR OUTTURNS
Nominal Growth Rates Real Growth Rates
Positive Growth Cases (nominal terms) Positive Growth Cases (real terms)
1 Foreign investment 64.1% 1 Foreign investment 64.1%
2 Credit to Government 56.3% 2 Credit to Government 34.5%
3 Credit to Agriculture 50.9% 3 Credit to Agriculture 29.1%
4 Money supply (M2) 29.9% 4 Telecom subscriptions 21.6%
5 Banks' profits 24.0% 5 Exports 21.1%
6 Credit to Construction/Housing 21.7% 6 Remittances 18.6%
7 Telecom subscriptions 21.6% 7 Average rainfall 8.4%
8 Exports 21.1% 8 Money supply (M2) 8.1%
9 Government Revenue 19.6% 9 Real GDP 6.3%
10 Remittances 18.6%
11 SOE bond issuance 9.8% Broadly Flat Growth Cases (real terms)
12 Average rainfall 8.4% 1 Imports 2.9%
13 Real GDP 6.3% 2 Crop output (CSA) 2.0%
3 Banks' profits 2.2%
Broadly Flat Growth Cases (nominal terms) 4 Electricity generation 2.2%
1 Imports 2.9% 5 Credit to Construction/Housing -0.1%
2 Electricity generation 2.2% 6 Government Revenue -2.2%
3 Crop output (CSA) 2.0% 7 Industrial Parks' Production -2.2%
4 Industrial Parks' Production -2.2% 8 Fuel consumption -3.8%
5 Fuel consumption -3.8%
Negative Growth Cases (real terms)
Negative Growth Cases (nominal terms) 1 Cement production -4.5%
1 Cement production -4.5% 2 Capital goods imports -5.9%
2 Capital goods imports -5.9% 3 SOE Bond issuance -12.0%
3 External grants -17.5% 4 ECX traded crop volumes -19.3%
4 ECX traded crop volumes -19.3% 5 NBE reserves -23.2%
5 NBE reserves -23.2% 6 Tourist visitors -35.3%
6 Tourist visitors -35.3% 7 External loans -57.1%
7 External loans -57.1% 8 External grants -17.5%
Share with Positive Nominal Growth: 64% Share with Positive Real Growth: 52%
Share with Negative Nominal Growth: 36% Share with Real Nominal Growth: 48%
Simple average of the 25 HFIs growth last FY: 1.5%

Simple average of the 25 HFIs growth last FY, excl 3 outliers: 2.2%
Weighted average (approximate) of HFIs growth last FY: 4.2% Weights

Agirculture Indicators 3.9% 32.5%
Industry Indicators 7.1% 29.3%
Services Indicators 2.2% 38.2%
GDP deflator: 21.8%
Source: Cepheus Research compiliation based on data from CSA, NBE, MOPD, MOF, ECX, MOTI, EIC, NMA, IPDC, Banks' Annual Reports, and press reports.
Cement production is H2 vs H1 of 2020-21 given data unavialability
Real growth rates based on deflating nominal Birr figures by 21.8% (GDP deflator) and actual for those data that are in volume or USD terms.
Weighted average real growth is only an indicatove calculation using GDP sub-sector weights to various HFIs classified per one of the three sub-sectors.
9
High Frequency Indicators Data: Part 3, Latest Year-to-Date Outturns
• Although only around half of the high frequency indicators are available for the first quarter or first half of
this fiscal year, a similar compilation again reveals a wide dispersion in growth rates among sub-sectors.
• Among the set of available indicators for this fiscal year, only around one-third are now exhibiting expansion
in real terms, suggesting some underlying weakness in economic activity in the six-months to Dec 2021.
Figure 1.5A High Frequency Indicators, Year-to Date Growth in FY 2021-22
Current Fiscal Year: Nominal Growth Rates for Year-to-Date Outturns
Tourist inflows 156%
Banks' profits 88%
Money suppl y (M2) 28%
Imports 24%
Credit to Construction/Housing 23%
Exports 22%
Industrial Parks Production 20%
Government Revenue 17%
Cement pr oduction -13%
Capital g oods im ports -28%
NBE reserves -34%
External loans -69%
ECX traded crop volum es -75%
-100% -50% 0% 50% 100% 150% 200%
Source: Cepheus Research compiliation based on data from CSA, NBE, MOPD, MOF, ECX, MOTI, EIC, NMA, IPDC, Banks' Annual Reports, and press reports.
Note: Depending on data availability, year-to-date growth figures are 3-month, 4-month, 5-month, or 6-month growth rates vs same period last year.
Figure 1.5B: High Frequency Indicators (HFIs): Positive and Negative Growth Cases in both Nominal and Real Terms
Year-to-Date Figures for CURRENT FISCAL YEAR (2021-22)
Nominal Growth Rates Real Growth Rates
Positive Growth Cases (nominal terms) Positive Growth Cases (real terms)
1 Tourist inflows 155.6% 1 Tourist inflows 155.6%
2 Banks' profits 87.5% 2 Banks' profits 57.5%
3 Money supply (M2) 28.4% 3 Industrial Parks Production 19.8%
4 Imports 24.3% 4 Imports 24.3%
5 Credit to Construction/Housing 23.5% 5 Exports 21.8%
6 Exports 21.8%
7 Industrial Parks Production 19.8%
8 Government Revenue 16.5%
Negative Growth Cases (nominal terms) Negative Growth Cases (real terms)
1 Cement production -13.2% 1 Money supply (M2) -1.6%
2 Capital goods imports -27.8% 2 Credit to Construction/Housing -6.5%
3 NBE reserves -34.4% 3 Cement production -13.2%
4 External loans -68.5% 4 Government Revenue -13.5%
5 ECX traded crop volumes -75.1% 5 Capital goods imports -27.8%
6 NBE Reserves -34.4%
7 External loans -68.5%
8 ECX traded crop volumes -75.1%
Share with Positive Nominal Growth: 57% Share with Positive Real Growth: 36%
Share with Negative Nominal Growth: 43% Share with Real Nominal Growth: 64%
Source: Cepheus Research compiliation based on data from NBE, MOPD, MOF, ECX, MOTI, EIC, Banks' Survey Data, and press reports.
Cement production is H2 vs H1 of 2020-21 given lack of data; ECX data based on monthly average year-to-date data vs last year monthly average.
Credit to Construction proxied by overall credit growth of 23 percent as of December 2021 from Banks' Survey Data.
Real growth rates based on deflating nominal Birr figures by 21.8% (GDP deflator) and actual for others in volume or USD terms.
10
High Frequency Indicators Data: Part 4, Areas of Strength
• In reviewing the trends among the high frequency indicators, the segments showing strong expansion
and/or real growth more recently include: overall exports, industrial park exports, imports, quarterly
revenue, money supply, net credit to government, bank profits, and tourism inflows (the latter due to an
unusually year-ago base).
• It is notable that the positive real growth in some of these indicators—such as for money supply, credit to
government, or imports—are not necessarily positive developments to the extent they are adding to
inflationary pressures, crowding out private sector credit, or involving fx outflows to the rest of the world.
Figure 1.6A: Industrial Parks Monthly Exports (USD mns) Figure 1.6B: Total Monthly Exports (USD mns)
Monthly Industrial Parks Export Value of Exports

20.00 450
19.13
19.00 416
402
18.00 17.30 400
17.00 16.52 360
16.21 352 345
16.00 350 336
329
15.00 14.52 14.50 14.43 14.49 310
305
14.00 300 288
13.15 275 276
13.00 12.50
12.07 12.24 255 256
12.00 11.70 244
250 232 234
11.00
10.00 200
21
20
21
21
0
1
21
1
21
1
1
21
21
21
1
0
1
20
20
21
21
21
0
1
21
1
-2
-2
-2
-2
-2
l-2
-2
-2
-2
-2
l-2
l-2
-2
-2
-2
-
n-
n-
b-
r-
p-
g-
r-
g-
g-
ec
ar
ov
ov
n-
n-
ay
ct
p-
b-
p-
ct
ct
ec
ar
ov
ov
Ju
ay
Ap
Ju
Ju
Ju
Ja
Fe
Se
Au
Ap
Au
Au
Ju
M
Ja
Se
Fe
Se
D
O
N
M
D
M
N
N
Source: EIC Source:MOTI
Figure 1.6C: Quarterly Revenue levels (Birr bns) Figure 1.6D: FDI Flows (USD mns)
Quarterly Revenue FDI (USD mns)

2,500
80 78
74 75
75
70 2,000
70 1,907
70 67
65 63 1,500
60
56
1,000
55
50
700 707 725
50 662 632
500 561
496
45
2)
3)
4)
1)
2)
3)
4)
1)
))
ov
Q
-
0(
0(
0(
1(
1(
1(
1(
2(
,N
/2
/2
/2
/2
/2
/2
/2
/2
ct
2019-20 QI 2019-20 2019-20 2019-20 2020-21 QI 2020-21 2020-21 2020-21

19
19
19
20
20
20
20
21
O
2(
20
20
20
20
20
20
20
20
QII QII I Q4 QII QII I QIV

/2
21
20
Source: ERCA Source: NBE, EIC
11
High Frequency Indicators Data: Part 3, Areas of Weakness
• The greatest areas of weakness among the most recent indicators include: credit to construction; cement
production, capital goods imports, external loans, external grants, and fx reserves.
Figure 1.7A: Capital Goods Import Growth Rate (%)

Capital good import growth rate
80%
72%
60%
39%
40%
29%
20% 17%
7%
4%
0%
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
-1% 2016/17 2017/18 2018/19 2019/20 2020/21 Nov-21
-4% -5% -6%
-12% -13%
-20%
-18%
-28%
-40%
Source: NBE
Figure: 1.7B Grants (USD mns)
Grants (USD mns)

2,200
2,087
2,000
1,800
1,600
1,488
1,428
1,400
1,226 1,228
1,200
1,000
2017 2018 2019 2020 2021
Source:NBE
Figure 1.7C: NBE's Foreign Exchange Reserves (USD mns)
NBE FX Reserves
$4,500
$3,958 $3,920
$4,000
$3,745
$3,500 $3,415
$3,209 $3,277
$3,069
$2,965
$3,000 $2,841
$2,597
$2,450 $2,523
$2,500
$2,151
$2,000
$1,500
$1,000
Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept
2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021
Source: NBE
12
Section 2: Deficits and Debts
• Ethiopia is facing a widening budget deficit this year, as the conflict has reduced some revenue collections while
simultaneously bringing sharply increased spending in certain areas. Still, due to a long-standing practice of relying on
expenditure cuts and re-adjustments in the face of economic shocks, the increase in the deficit should be relatively
moderate—from 2.7 percent of GDP in 2020-21 to 4 percent of GDP this fiscal year, per our estimates.
• Even with limited grants and loans to support the budget, the financing of the deficit has so far been manageable
thanks to the Government’s ability to borrow from domestic sources—namely from the NBE, commercial banks, and
pension funds. The NBE has provided funding via direct advances and the banks and pension funds via T-Bill purchases.
• A rising budget deficit, a sharp fall in the price of Ethiopia’s sole external sovereign bond, and multiple rating agency
downgrades (by Standard & Poor’s, Moody’s, Fitch) are all bringing a sense of an imminent debt crisis among many
observers. However, the likelihood of a debt default remains very low, in our view, as Ethiopia faces mainly a debt
servicing burden (due to a bunching up of repayments over the coming years) rather than a debt stock problem, and
it is also actively seeking solutions with foreign and domestic lenders to address the short-term repayment pressures.
This section reviews recent fiscal and debt developments and summarizes in particular:
• The fiscal outturns for the most recent fiscal year (2020-21), which were marked by a budget deficit of 2.7
percent of GDP and a public debt stock of USD $55.6bn, or roughly unchanged at 51% of GDP (pgs 14 to 15).
• The contents of the Government Budget approved for the current fiscal year, which reflected decisions taken
well before the intensification of the conflict in July 2021 and—on that basis—showed planned expenditure of
Birr 562bn, with the top allocations to roads (Birr 67bn), education (66bn), debt service (45bn) (pg 16-17).
• The status of budgetary developments in the current fiscal year, which on the basis of financing data to end-
December 2021, point to a widening deficit that is mainly being covered by domestic sources (pg 18).
• Debt sustainability considerations, which suggest slightly better debt stock ratios over the past few years
(Debt/GDP, Debt to Exports) but still challenging debt service burdens (pg 19).
Taking into consideration all of the above, the likelihood of the Government facing a debt default appears very low,
even though efforts will continue to seek debt service relief to stretch out repayments due over the coming years. The
public debt burden has fallen from 59 to 51 percent of GDP in the past three years, and the external public debt burden
from 31% to 27% of GDP. Ethiopia met all external debt obligations in 2020-21, paying out close to $2bn worth of principal
and interest repayments during the fiscal year. In addition, faced with a decline in external funding, the Government has
managed to finance its extra spending by re-allocating existing budgetary items and by using domestic sources (the central
bank, commercial banks, pension funds) to cover the moderately larger deficit. Reductions in subsidies (for fuel, utilities)
are being implemented to minimize fiscal costs. Also working in the Government’s favor is the fact that it has not seen any
material spike in borrowing costs, as its external loans are largely at low and fixed rates, the sovereign bond has a fixed
6.65% coupon (irrespective of the changing yields), and domestic T-Bills yields have remained in the range of 8-10 percent
despite conflict conditions. There will remain a need for debt service relief, mainly on SOE debt, but initiatives in this area
are already in place both for the external component (via the IMF/G20 ‘Common Framework’ scheme) and for the domestic
component (via a new debt management vehicle). With much improved prospects for exports and other fx inflows
(including a lower current account deficit), on-going strengthening in revenue, and continued reliance on concessional
borrowing, the overall debt burden should thus become increasingly more manageable over the coming years.
13
Fiscal developments: last year’s main outturns, revenue, expenditure and deficit financing
• Preliminary data on last year’s fiscal outturns suggest revenue and expenditure outturns of around 90
percent of budgeted levels, which left the deficit not substantially different from budgeted levels (Birr 115bn
vs Birr 126bn).
• The budget deficit amounted to 2.7 percent of GDP, not much changed from its ratio in the year earlier.
• The gross change in domestic debt for the year (based on debt data) was close to Birr 168bn, though this
overstates the deficit since it does not account for Government deposit balances at banks.
Figure 2.1C: Government Financing in FY 2020-21**

Figure 2.1A: Budget Performance in 2019-20 and 2020-21, Birr bns
Birr bns % of Total
FY 2019-20 Budget Prel Outturn Change in Government Debt 208.4 100.0%
FY 2020-21 FY 2020-21
External Debt: Gross Increase in FY 2020-21 40.1 19.2%
Total revenue and grants 395.0 350.0 317.0
Total Revenue 354.3 304.5 304.7 Multilaterals
Grants 40.7 45.5 12.3 World Bank (IDA) 30.3 14.5%
African Development Bank (AfDB, AfDF) 2.9 1.4%
European Development Bank 2.1 1.0%
Total Expenditure 480.1 476.0 432.1 IFAD 0.5 0.3%
Current Expenditure 275.97 133.3 141.82 BADEA 0.1 0.0%
Capital Expenditure 204.18 160.3 114.52 OFID 0.0 0.0%
Bilaterals lenders
Budget balance -85.2 -126.0 -115.1
Korea EXIM 2.2 1.0%
China 0.9 0.5%
Italy 0.8 0.4%
Source: NBE France AfD 0.2 0.1%
Kuwait Fund 0.0 0.0%
Saudi Fund 0.0 0.0%
Figure 2.1B: Budget Performance, In Percent of GDP
Domestic Debt: Increase in FY 2020-21 168.3 80.8%
FY 2019-20 FY 2020-21 Change
By lender 168.3 80.8%
Total revenue and grants 11.7% 7.3% -4.4% From National Bank of Ethiopia 51.7 24.8%
Total Revenue 10.5% 7.0% -3.5% From Pension Funds 47.8 22.9%
Grants 1.2% 0.3% -0.9% From Commercial Bank of Ethiopia 42.5 20.4%
From Development Bank of Ethiopia 21.0 10.1%
Total Expenditure 14.2% 10.0% -4.3% From Private Banks 7.0 3.3%
From Others (non-banks, non-pension funds) (1.6) -0.8%
Current Expenditure 8.2% 3.3% -4.9%
Capital Expenditure 6.1% 2.6% -3.4%
By instrument 168.3 80.7%
Treasury Bills 97.3 46.7%
Deficit, percent of GDP -2.5% -2.7% -0.1% Direct Advances 52.5 25.2%
Treasury Bonds 20.2 9.7%
GDP (Birr bns) 3,374 4,341 28.7% Treasury Notes (1.6) -0.8%
Source: NBE,MoPD Source: MoF Public Debt Bulletin June 2021, Tables 21 and 23.
**Note: Gross borrowing is not equivalent to the fiscal deficit and will be higher than net debt and net credit to
government given repayments for the year and movements in deposit balances at NBE and at Banks. Thus, net
credit to Government figures (net budget deficit financing) for the fiscal year is less the the gross figures
14
Fiscal developments: last year’s main outturns, public debt developments
• Public Debt in dollar terms has risen slightly from $54.9bn in June 2020 to $55.6bn in June 2021 and further to
$56.7bn as of September 2021. This total public debt stock is roughly evenly split between external and
domestic debt.
• Relative to GDP, the public debt stock has fallen from 51.1 percent of GDP in June 2020 GDP to 50 percent of
GDP in June 2021. With a higher USD GDP denominator (of ~$116bn) anticipated for the current fiscal year, the
September public debt figure of $56.7bn will show a further decline—to 47.1 percent—relative to GDP. Low
accumulation of new debt and on-going repayments explain the gradual decline in debt ratios.
Figure 2.2A: Public Debt, USD bns Figure 2.2B: Public Debt, % GDP
June 2020 Sept 2020 Dec 2020 Mar 2021 June 2021 Sept 2021
Total Public Debt 51.1% 49.2% 49.1% 48.4% 50.0% 47.1%
Dec-19 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 % of Total
Total Public Debt $ 53.4 $ 54.9 $ 54.7 $ 54.6 $ 53.9 $ 55.6 $ 56.7 100.0%
External debt 26.7% 26.1% 26.7% 26.4% 26.5% 24.2%
Central Government 16.6% 16.6% 17.2% 17.2% 17.5% 16.1%
External debt $ 27.7 $ 28.7 $ 29.0 $ 29.7 $ 29.4 $ 29.5 $ 29.1 51.3% State Owned Enterprises 10.1% 9.5% 9.5% 9.2% 9.0% 8.0%
Central Government $ 16.6 $ 17.8 $ 18.5 $ 19.1 $ 19.1 $ 19.5 $ 19.4 34.2%
State Owned Enterprises $ 11.1 $ 10.9 $ 10.5 $ 10.6 $ 10.3 $ 10.0 $ 9.7 17.1% Domestic Debt 24.4% 23.1% 22.4% 22.0% 23.5% 23.0%
Central Government 11.5% 10.9% 10.8% 10.8% 12.4% 12.1%
Domestic Debt $ 25.7 $ 26.2 $ 25.7 $ 24.9 $ 24.5 $ 26.1 $ 27.6 48.7% State Owned Enterprises 12.9% 12.2% 11.6% 11.2% 11.1% 10.9%
Central Government $ 12.3 $ 12.4 $ 12.2 $ 12.0 $ 12.1 $ 13.7 $ 14.6 25.7%
Memo items:
State Owned Enterprises $ 13.4 $ 13.9 $ 13.6 $ 12.9 $ 12.5 $ 12.4 $ 13.1 23.0% GDP, Birr bns 3,374 4,341 4,341 4,341 4,341 5,759
GDP, USD bns $ 106.8 $ 111.3 $ 111.3 $ 111.3 $ 111.3 $ 120.2
Source: MoFEC Public Debt Bulletin Source: MoFEC Public Debt Bulletin
Figure 2.2C: External Debt (Public Sector), In USD bns Figure 2.2D: External Debt Service Payments, FY 2020-21 and July-Sep 2021
FY 2020-21 Jul-Sep 2021

June 2017 June 2018 June 2019 June 2020 June 2021 Sept 2021 % of Total USD mns USD mns
Total External Debt of Public Sector, USD bns$ 23.3 $ 25.9 $ 27.0 $ 28.7 $ 29.5 $ 29.1 100.0% Annual external debt service dues:
Government $ 13.0 $ 14.7 $ 16.0 $ 17.8 $ 19.5 $ 19.4 66.7%
By payment type $ 1,844 $ 608
EAL & Ethio-telecom $ 6.9 $ 7.6 $ 7.3 $ 7.2 $ 6.7 $ 6.5 22.3%
Interest payments $ 474 $ 155
Other State Enterprises $ 3.4 $ 3.6 $ 3.8 $ 3.6 $ 3.3 $ 3.2 11.0%
Principal payments $ 1,370 $ 452
Total External Debt of Public Sector, % GDP 28.6% 30.9% 28.4% 26.8% 26.5% 26.1% … By debtor $ 1,844 $ 608
Government $ 302 $ 143
Government 15.9% 17.6% 16.7% 16.7% 17.5% 17.4% …
State Owned Enterprises $ 1,542 $ 465
EAL & Ethio-telecom 8.5% 9.1% 7.6% 6.8% 6.0% 5.8% …
Other State Enterprises 4.2% 4.3% 4.0% 3.4% 3.0% 2.9% … By creditor $ 1,844 $ 608
Multilateral creditors (IMF, WB, etc) $ 262 $ 65
Bilateal creditors (incl China) $ 531 $ 232
GDP, USD bns $ 81.6 $ 83.9 $ 95.3 $ 106.8 $ 111.3 $ 111.3 …
Private lenders (banks/bondholders) $ 1,051 $ 311
Source: MoFEC Public Debt Bulletin Source: MoFEC Public Debt Bulletin; as of September 2021
15
Fiscal developments: Budget for the Current Fiscal Year
• The budget for the current 2021-22 fiscal year passed in June 2021 (largely before the intensification and
spread of the conflict) anticipated expenditure of Birr 562bn, to be covered by revenue of Birr 369bn, grants
of Birr 67bn, and deficit financing of Birr 126 bn.
• The deficit of Birr 126bn (2.7 percent of GDP) was, in turn, to be met by Birr 57bn (1.2% of GDP) of net
domestic borrowing and Birr 69bn (1.5% of GDP) of net external borrowing.
Fig 2.3A: Federal Government Budgets for the Current and Recent Fiscal Years
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22

Data in Birr billions Budget Budget Budget Budget % of Total
Revenue and Grants 254.3 289.8 350.0 435.9 100%

Revenue 235.2 253.0 304.5 369.1 85%
Tax Revenue 211.1 224.8 271.7 334.0 77%
Non-Tax Revenue 24.1 28.2 32.8 35.1 8%
Grants 19.1 36.8 45.5 66.8 15%
Expenditure 380.8 387.0 476.0 561.7 100%

By functional classification
Current expenditure 125.4 109.5 133.3 162.2 29%
Capital expenditure 113.8 130.7 160.3 183.5 33%
Subsidies to Regions 135.6 140.8 176.4 204.0 36%
SDGs contribution 6.0 6.0 6.0 12.0 2%
By spending level
Federal Govt expenditure 239.2 240.2 293.7 345.7
Regional Govt expenditure 141.6 146.8 182.4 216.0
Deficit 51.8 97.2 126.0 125.8 100%

Foreign Financing 19.1 40.3 48.0 56.9 45%
Domestic financing 32.7 56.8 78.0 68.9 55%
Data in Percent of GDP FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
Revenue and Grants 9.7% 9.0% 8.6% 9.3%

Revenue 9.0% 7.8% 7.5% 7.8%
Tax Revenue 8.1% 7.0% 6.7% 7.1%
Non-Tax Revenue 0.9% 0.9% 0.8% 0.7%
Grants 0.7% 1.1% 1.1% 1.4%
Expenditure 14.5% 12.0% 11.7% 11.9%

Current expenditure 4.8% 3.4% 3.3% 3.4%
Capital expenditure 4.3% 4.0% 3.9% 3.9%
Subsidies to Regions 5.2% 4.4% 4.3% 4.3%
SDGs contribution 0.2% 0.2% 0.1% 0.3%
Deficit 2.0% 3.0% 3.1% 2.7%

Foreign Financing 0.7% 1.2% 1.2% 1.2%
Domestic financing 1.2% 1.8% 1.9% 1.5%
Nominal GDP* 2,620 3,227 4,082 4,712
Source: MOF Budget Document of June 2021 and Cepheus Research compilation.
*Note: Nominal GDP is per budget document expectation at time of passage of the budget
16
Fiscal developments: Expenditure Details for the Current Fiscal Year
• A more detailed expenditure breakdown shows that 62 percent of the budgeted Birr 562bn is allocated for
federal government outlays, while most of the remaining 38 percent reflects subsidies to regions.
• Key spending items in the Federal Government’s approved budget from June 2021 include roads (Bir 67bn,
education (66bn), debt repayments (45bn), defence (22bn), health (20bn), and agriculture (19bn).
Figure 2.3B: Budget Expenditure in FY 2021-22 by Main Categories
2019-20 2020-21 2021-22 % of Total

Budget Budget Budget
Total Budget Expenditure, Birr bns 387.0 476.0 561.7 100.0%
A. Federal Government Expenditure 240.2 293.7 345.7 61.6%

1. Administration and General 38.7 47.1 59.7 10.6%
1.1 Organ of State 4.4 7.4 6.2 1.1%
1.2 Justice and Security 8.1 10.4 12.4 2.2%
1.3 Defense 15.0 16.5 22.0 3.9%
1.4 General Service 11.2 12.8 19.1 3.4%
2. Economy 93.3 113.5 127.3 22.7%
2.1 Agricultural and Rural Devpt 14.5 15.3 18.5 3.3%
2.2 Water Resources & Energy 17.5 21.5 17.6 3.1%
2.3 Trade and Industry 2.1 2.5 3.3 0.6%
2.4 Mines 0.2 0.2 0.4 0.1%
2.5 Transport and Communication 2.3 3.0 3.7 0.7%
2.6 Urban Development and Constr. 56.6 71.0 83.8 14.9%
2.6.1 Roads Authority 46.7 58.8 67.4 12.0%
3. Social 68.0 80.7 99.3 17.7%
3.1 Education 50.6 56.8 66.1 11.8%
3.2 Culture and Sport 3.8 3.5 3.6 0.6%
3.3 Health 12.8 19.4 20.4 3.6%
3.4 Labor and Social Affairs 0.2 0.2 0.2 0.0%
3.5 Prevention and Rehabilitation 0.7 0.8 8.9 1.6%
4. Others 40.2 52.4 59.4 10.6%
4.1 Transfers to public bodies 0.9 2.0 3.0 0.5%
4.2 Debt repayments 25.2 37.0 45.1 8.0%
4.2.1 External debt repayments 15.4 21.5 31.8 5.7%
4.2.2 Domestic debt repayments 9.8 15.5 13.3 2.4%
4.3 Contingencies 14.1 13.4 11.3 2.0%
B. Subsidies To Regions 140.8 176.4 204.0 36.3%

Tigray 8.3 10.4 12.1 2.2%
Afar 4.2 5.2 6.1 1.1%
Amhara 29.8 37.3 43.3 7.7%
Oromia 47.6 59.4 69.1 12.3%
Somalia 13.8 17.2 20.0 3.6%
Benshangul-Gumuz 2.5 3.2 3.7 0.7%
SNNP 27.8 34.7 32.3 5.7%
Gambella 1.8 2.3 2.7 0.5%
Harari 1.0 1.3 1.5 0.3%
Addis Ababa 2.6 3.9 3.3 0.6%
Dire Dawa 1.2 1.5 1.8 0.3%
Sidama … … 8.1 1.4%
C. Sustainable Devt Goals Allocation 6.0 6.0 12.0 2.1%
By Economic/Functional basis 387.0 476.0 561.7 100.0%

Economic 93.2 113.5 127.3 22.7%
Social 68.0 80.7 99.3 17.7%
General 38.6 47.1 59.7 10.6%
Other Sectors 40.2 52.4 59.4 10.6%
Subsidies To Regions 140.7 176.4 204.0 36.3%
Sustainable Devpt Goals Allocation 6.0 6.0 12.0 2.1%
Source: MOFEC Budget document
17
Fiscal developments: Current Fiscal Year Developments,
• Budgetary developments for the current year can be inferred from monthly revenue data released by the
Ministry of Revenue (available to November 2021), quarterly debt data from the Ministry of Finance
(available to September 2021), as well as monthly data on Treasury Bill auctions from the NBE (available as
of end-December 2021).
• Notable trends to date include: (1) continued strong revenue collections of Birr 127bn in the first five months
of the year, up 17% year-on-year; (2) gross government domestic borrowing of Birr 76bn for the first quarter
of the fiscal year; and (3) T-Bill related net borrowing of Birr 82bn for the first half of the year. Given overlaps
in the latter two financing sources, we estimate total borrowing for the first half of the year is close to Birr
100bn, suggesting a moderately wider deficit that is likely to reach Birr 200bn for the full fiscal year.
Figure 2.4A: Government Financing in July-December 2021
July-September 2021
Birr bns % of GDP % of Total
Change in Government Debt, July-Sep 2021 Quarter 76.1 1.3% 100.0%
External Debt: Change in External Debt in July-Sep 2021 5.9 0.1% 7.7%
Multilateral lenders 5.9

World Bank (IDA) 4.5
African Development Bank 1.0
IFAD 0.2
OFIC 0.1
Bilateral lenders -
Domestic Debt: Change in Domestic Debt in July-Sep 2021 70.2 1.6% 92.3%
By lender 70.2 1.6% 92.3%

From Commercial Bank of Ethiopia 35.5 46.7%
From National Bank of Ethiopia 30.0 39.4%
From Pension Funds 10.0 13.2%
From Development Bank of Ethiopia - 0.0%
From Private Banks (5.6) -7.3%
From Others (non-banks, non-pension funds) - 0.0%
By instrument 70.2 1.6% 92.3%

Treasury Bills 40.3 52.9%
Direct Advances 30.0 39.4%
Treasury Bonds - 0.0%
Treasury Notes - 0.0%
Source: MoF Public Debt Bulletin September 2021, Tables 21 and 23.
Figure 2.4B: Treasury Bills Market: Financing Amounts in July-December 2021
Jun-20 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
T-BIlls Outstanding, Birr bns 23.7 118.8 152.1 187.3 159.8 202.9 208.2 200.6
28-Day T-Bills 0.4 9.7 14.5 7.4 3.6 5.3 3.9 0.4
91-Day T-Bills 11.6 47.9 59.3 79.4 53.6 48.3 22.6 19.5
182-Day T-Bills 11.8 30.7 44.7 61.8 62.1 63.8 68.7 61.4
365-Day T-Bills - 30.6 33.7 38.7 40.5 85.5 113.0 119.3
Effective borrowing rate: 9.5% 8.6% 9.9% 9.8% 7.7% 8.9%
Implied net borrowing during month: 33.3 35.2 (27.4) 43.0 5.3 (7.6)
Cumulative net borrowing via T-Biills since start of FY: 33.3 68.4 41.0 84.0 89.4 81.7
Source: Cepheus Research compilation based on NBE data provided on their website.
18
Fiscal developments: Debt Sustainability considerations
• Key debt sustainability metrics show relatively moderate debt burden ratios, including: (1) debt to GDP falling
to 50 percent; (2) an external public debt ratio of just 27 percent of GDP; and (3) an even lower NPV of
external public debt to GDP ratio of 19 percent (to account for concessional rate debt). The NPV of external
debt to goods exports remains high (at 588%) but is much more moderate (157%) if one accounts for the fact
that Ethiopia’s recurring fx inflows include not just goods exports but also service exports and remittances.
• On the debt service side, there is indeed a heavier burden observed, consistent with Ethiopia’s request for
debt service relief as opposed to debt stock reductions. Annual external public debt service of near $2bn in
recent years is about a quarter of revenue and half percent of exports; however, considering again the full
scope of recurring fx inflows in the Ethiopian context, debt service payments are around 14 percent of the
three main recurring current account inflows (goods exports, service exports, and remittances).
Figure 2.5: Ethiopia's Debt Sustainability Metrics
2018-19 2019-20 2020-21
Public Debt indicators

Public Debt, USD bns $ 53.7 $ 55.3 $ 55.6
Public Debt to GDP, In % 56.1% 51.8% 50.5%
Public Debt to Revenue, in % 485% 493% 719%
External Public Debt indicators

External Public Debt, USD bns $ 27.1 $ 28.9 $ 29.5
External Public Debt to GDP, in % 28% 27% 27%
External Public Debt to Exports of Goods, in % 1015% 967% 816%
External Public Debt to Exports of G & S, in % 356% 378% 348%
External Public Debt to Exports of G & S & R, in % 203% 234% 218%
External Public Debt to Revenue, in % 245% 258% 381%
Net Present Value (NPV) indicators

NPV of External Public Debt, USD bns $ 19.5 $ 20.8 $ 21.3
NPV of External Public Debt to GDP, In % 20.4% 19.5% 19.3%
NPV of External Public Debt to Exports, In % 731.4% 696.6% 587.8%
NPV of External Public Debt to Exports of G&S, In % 394.1% 446.2% 436.3%
NPV of External Public Debt to Exports of G&S&R, In % 146.5% 168.2% 156.8%
NPV of External Public Debt to Revenue, In % 176.2% 185.6% 274.8%
External debt service payments

External Public Debt Service, USD bns $ 2.036 $ 2.003 $ 1.866
External Public Debt Service to Revenue, in % 18.4% 17.9% 24.1%
External Public Debt Service to Exports, in % 76.4% 67.0% 51.6%
External Public Debt Service to Exports of G&S&R, in % 15.3% 16.2% 13.8%
Macro indicators 2018-19 2019-20 2020-21

USD GDP bns $ 95.7 $ 106.8 $ 110.3
Revenue, USD bns $ 11.1 $ 11.2 $ 7.7
Revenue, Birr bns 311.3 354.3 304.7
Exch rate year-avg, Birr/USD 28.1 31.6 39.4
Exports of Goods, USD bns $ 2.7 $ 3.0 $ 3.6
Exports of Services, USD bns $ 4.9 $ 4.7 $ 4.9
Remittances, USD bns $ 5.7 $ 4.7 $ 5.1
Exports of G&S, USD, bns $ 7.6 $ 7.7 $ 8.5
Exports of G&S&R, USD bns $ 13.3 $ 12.4 $ 13.6
Nominal to NPV Debt conversion factor, % 72% 72% 72%
Source: MOF Debt Bulletin and 2020 IMF Staff Report.

Note: Nominal to NPV conversion factor based on 2020 IMF Staff Report's Debt Sustainability Analysis.
"Exports of G & S & R" refers to Exports of goods and services and remittances
19
Section 3: Money and Inflation
• With an expansionary fiscal stance dominating macro policy, monetary policy has played a subservient role over the past
year and found itself accepting and accommodating the need for large government borrowing.
• Reflecting the above, net domestic credit to government (as of September 2021) was up 94 percent from year ago levels,
and is showing the highest growth rates in over a decade. NBE, commercial banks, and pension funds have stepped in
to cover the jump in government borrowing.
• While the ability of Government to fund its deficits from domestic sources is positive, and understandable under the
circumstances, this of course comes at a cost to other parts of the economy. Two major casualties with this policy
approach are seen with: (1) the drop in growth of credit to the private sector; and (2) the spike in inflation.
Ethiopia has in the past year provided a clear case of ‘fiscal dominance’, wherein monetary policy is largely driven by
and working in the service of financing expansionary budgetary policies. Most notably:
• There has been a large growth in broad money, reflecting in large part an expansion in credit to government and
state enterprises. Money supply was up 30 percent for the 2020-21 fiscal year (from Birr 1,038bn to Birr 1,348bn) and
is still showing high growth, of 28 percent year-on-year, as of September 2021. This expansion has been driven by and
is mainly the counterpart of: (1) the increase in net banking system credit to government (which rose from Birr 137bn
in June 2020 to Birr 287bn as of September 2021, or by Birr 150bn over the 15-month period); and (2) the Birr 115bn
increase in state enterprise debt (from Birr 487bn to Birr 602bn per MOF data) over the same period.
• Despite the expansion in money supply, the foreign exchange component (foreign assets) declined over the course
of 2021. Fx reserves fell from $3.1bn at end-2020 to $2.9bn as of June 2021 and to $2.2bn by September 2021 (the
latter equivalent to near 2 months of imports). The drop in such official (NBE) fx reserves reflects the Government’s
use of fx funds (debt service, fuel, and other public sector imports) that is not offset by new sources of fx inflows—
which for the NBE are primarily from grants, loans, privatization receipts, and fx funds surrendered by commercial
banks (previously 50% now 70%). As commercial banks fx reserves strengthened over the same period, the decline in
overall banking system fx reserves was more modest (from $4.4bn to $4.0bn between June 2020 and September 2021).
• Crowding out of the private sector is taking place, given the high growth in credit supplied to the government. After
many years of improved allocations to the private sector, the combination of higher deficits and a drop in external
financing, has reduced the pool of loanable funds available to the private sector. As of September, growth in credit to
the non-government sector was only 17 percent year-on-year (below inflation), while an estimate of growth to the
private sector (excluding state enterprises) reveals a level decline during the July-September 2021 period.
• Strong monetary growth appears to be contributing to inflation, even if it is certainly not the sole culprit: An analysis
of the main components of inflation suggests that multiple factors—beyond just monetary policy—are having a
contribution, including supply-side disruptions to food markets, transport bottlenecks, rising global commodity prices,
and a strongly depreciating exchange rate. On the specific role or weight of monetary policy, while the link between
monetary growth and inflation is not clear-cut, the fact that the recent spike in inflation follows a jump in net credit to
government (and particularly a jump in central bank credit to government) is strongly suggestive of at least a partial
causal relationship. Moreover, even if other factors are at play, it is the case that monetary policy can play a role to
offset those other contributors, which has not—so far—been the case in the Ethiopian context.
The underlying data and charts summarizing the above key trends is summarized in the following pages 21-29.
20
Monetary and credit conditions: Broad Money and Net Credit to Government from the Banking System
• Recent rates of broad money growth (30% y-o-y as of June 2021 and 28% y-o-y as of September 2021) have
been above the 26 percent average annual growth of the past decade, but not substantially so.
• However, the recent growth in the banking system’s net credit to the Government is the highest seen in over a
decade. Net credit to the government from the banking system has nearly doubled between September 2020
and September 2021, from Birr 148bn to Birr 287bn, and is up by Birr 140bn or 94 percent.
Figure 3.1A: Broad Money and Credit to Government Trend Figure 3.1B: Broad Money Growth(%)
Broad Money Growth(%)

Broad Money and Net Credit to Government Trend
45%
1,650 400
1,348 1,393
1,450 350 40%
39%
1,250 300
1,038 35%
1,050 887 287 250
850 741 200 30% 30% 30%

214 29% 29%
650 573 150 28%
445 27% 27%
371 137 25%
450 100 24% 25%
102 110
250 85 50 21%
20% 20% 20% 20%
48
50 31 -
17%
June 15 June 16 June 17 June 18 June 19 June 20 June 21 Sept 21
15%
Broad Money Growth(Birr mns) Net Credi t to Govt Growth (Birr mns) June June June June June June June June June June June June June June Sept
08 09 10 11 12 13 14 15 16 17 18 19 20 21 21
Source: NBE Source: NBE
Figure 3.1C: Net Credit to Government from the Banking System, Y-o-Y Growth
Net Credit to Government from the Banking System, % Growth

100%
94%
80% 80%
60%
55% 56%
40%
23% 25%
20% 19%
14%
9% 8%
0% 1% 2%
-1%
June June June June June June June June June June June June June June Sept 21
08 09 10 11 -13%12 13 14 15 16 17 18 19 20 21
-20%
-25%
-40%
Source: NBE
21
Monetary and credit conditions: Sources of credit to government
• A broader measure of Government borrowing that captures all domestic financing sources (including from non-
banks) shows a similar expansion in the year to September 2021, with funding provided by commercial banks,
NBE, DBE, pension funds, and non-bank, non pension fund institutions.
• On this broader basis, gross domestic credit to Government is up from Birr 467bn to Birr 671 bn, or an increase
of Birr 204bn in the year to September, for growth of 44 percent.
Figure 3.2A: Domestic Credit to Government, By Lender--In Birr bns Figure 3.2B: Domestic Credit to Government, By Instrument
June 2018 June 2019 June 2020 June 2021 Sep 2021
Total Domestic Credit to Government 300.9 361.9 432.4 600.6 670.8
Commercial Bank of Ethiopia 26.7 26.6 26.5 69.0 104.5 Total Domestic Credit to Government 300.9 361.9 432.4 600.6 670.8
National Bank of Ethiopia 160.1 194.7 230.2 281.9 311.9 Treasury Bills 111.5 31.8 23.7 121.0 161.2
Pension Funds 78.3 103.9 133.9 181.7 192.0 Direct Advances 152.3 187.3 31 83.5 113.5
Development Bank of Ethiopia 32.8 32.8 32.8 53.8 53.8 Treasury Bonds 37.1 36.6 228.3 248.5 248.5
Private Banks 0.0 0.7 5.6 12.6 7.0 Treasury Notes 0 0 149.4 147.7 147.7
Others (non-banks, non-funds) 3.0 3.3 3.3 1.7 1.7
Source: MOF Debt Bulletin, Table 21, 23
Figure 3.2C: Domestic credit to government--BY LENDER

Figure 3.2D: Total Domestic credit to government--BY Instrument(Birr bns)
Domestic Credit to Government--BY LENDER

105.0%
Total Domestic credit to government--BY Instrument
1.0% 0.9% 0.8% 0.3% 0.3%
8.0%
105.0%
10.9% 9.1% 7.6% 9.0% 0.0%
12.3%
85.0%
24.6% 22.0%
85.0% 34.6%
26.0% 28.7% 31.0% 28.6%
30.3%
0.0%
65.0% 65.0% 10.1%
50.6% 37.0%
41.4%
45.0%
45.0% 52.8%
46.5% 51.8% 16.9%
53.2% 53.8% 53.2%
46.9% 25.0% 13.9%
25.0%
37.1%
7.2% 20.1% 24.0%
5.0% 8.8% 5.5%
5.0% 8.9% 7.4%
11.5% 15.6% June 2018 June 2019 June 2020 June 2021 Sep 2021
6.1% -15.0%
Treasury Bills Direct Advances Treasury Bonds Treasury Notes
-15.0%
Commercial Bank of Ethiopia National Bank of Ethiopia Pension Funds

Development Bank of Ethiopia Private Banks Others (non-banks, non-funds)

22
Monetary and credit conditions Foreign reserves drawdowns
• Official foreign reserves of the NBE have trended downwards for most of the past year and fell from $3.1bn as
of June 2020 to $2.8bn as of June 2021 and to $2.2bn as of September 2021. Over the same period, fx reserves
of commercial banks rose from $1.1bn to $1.8bn, helping offset the overall loss in banking system fx reserves
• Fx reserves stood at near 2.4 months of imports as of June 2021, and have not declined much in terms of months
of imports due to the drop in imports from near $17bn five years ago to only $14bn last year. Relative to GDP,
fx reserves have trended downwards from near 5 percent five years ago to 2.6% of GDP last fiscal year.
Figure 3.3A : FX Reserve: NBE and Commercial Banks (USD mns)
FX Reserve: NBE and Commercial Banks (USD mns)

$4,500
$3,958 $3,920
$4,000 $3,745
$3,415
$3,500 $3,277
$3,209
$3,069
$2,965
$3,000 $2,841
$2,597 $2,523
$2,450
$2,500
$2,151
$2,000 $1,845
$1,737
$1,500 $1,333
$1,118 $1,107
$1,011 $944 $987 $1,005
$887 $904
$1,000 $754 $750
$500
$-
Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
Banks NBE
Source: NBE
Figure 3.3B: Reserves, months imports
Reserves, months imports

5.0
4.4
4.5
4.0
3.5
3.0 2.8
2.7
2.5 2.5 2.4 2.4 2.4
2.5 2.4
2.2 2.2
2.0
1.5
1.0
0.5
-
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Source: NBE
Figure 3.3C: Reserves as % GDP
Reserves as % GDP
10.0% 9.5%
9.0%
8.0%
7.0%
6.0%
5.2% 5.0%
5.0%
5.0% 4.5% 4.6%
3.9%
4.0% 3.4% 3.6%
3.0%
3.0% 2.6%
2.0%
1.0%
0.0%
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Source: NBE
23
Monetary and credit conditions: Crowding out
• Growth in credit to the Non-Government Sector (including state enterprises and private firms) has fallen below
20 percent for the first time a over a decade. Moreover, after a continued upward trend for most of the past
decade, the ratio to GDP begun to fall for the first time last year.
• An estimate of credit to private firms, derived by subtracting changes in SOE domestic debt, shows a level
decline in credit to the private sector since the start of the fiscal year. Per our estimates, of the Birr 325bn in
banking system credit expansion between end-June and end-September 2021, 43% was extended to
government, 32% to state enterprises, and only 26% to the private sector. This has reduced the stock of private
sector credit to 43 percent of total credit from a ratio of near 50 percent last year.
Figure 3.4A: Credit to Private Sector Growth Figure 3.4B: Credit to Private Sector to GDP Ratio (Percent)
Credit to Private Sector Growth Credit to Private Sector to GDP Ratio

60.0%
56.7% 34.0%
50.0% 49.7% 31.7%

32.0% 31.0% 30.8%
30.2%
40.0% 29.8%
30.0%
32.8% 27.9% 28.2%
30.0% 29.2% 28.0%
26.6% 26.2% 25.1% 25.1%
22.1% 23.3% 21.8% 21.9%
20.0% 20.3% 25.7%
26.0%
16.5% 24.4%
10.0% 24.0%
22.4%
0.0% 22.0%
Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 20.8%
Credit to Non Govt Growth 20.0%

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Source: NBE Source: NBE
Figure 3.4C: Trends on Total Credit and Credit to the Private Sector, In Birr billions
Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Sep-21 Sep-20 Sep-21

TOTAL CREDIT OUTSTANDING, by Sector 604 785 978 1,177 1,482 1,562 1,237 1,562
Government Sector (net) 85 102 124 137 214 287 148 287
Non-Government 518 683 854 1,040 1,268 1,275 1,089 1,275
State-Owned Enterprises (SOEs) 281 342 412 487 540 602 499 602
Private Sector 237 341 442 553 728 674 590 674
Loans by Private Banks 133 179 259 347 516 535 375 535
Loans by Others (CBE/DBE) 104 162 183 206 212 139 215 139
Change Shares
in Credit, in New
Sep 2021 Credit
CHANGE IN TOTAL CREDIT, by Sector … 181 194 199 305 … … 325 100%
Government Sector (net) … 17 22 13 77 … … 139 43%
Non-Government … … 187 57%
SOEs … 61 70 75 53 … … 103 32%
Private … 104 101 111 174 … … 83 26%
COMPOSITION OF TOTAL CREDIT, by Sector 100% 100% 100% 100% 100% 100% 100% 100%
Government 14% 13% 13% 12% 14% 18% 12% 18%
State-Owned Enterprises 47% 44% 42% 41% 36% 39% 40% 39%
Private Sector 39% 43% 45% 47% 49% 43% 48% 43%
Source: NBE and IMF Monetary Survey Data, as well as MOF Public Debt Bulletin Public Sector Domestic Debt Tables
24
Monetary Conditions and Inflation:
• The recent increase in inflation has moved closely with growth in money supply, especially since mid-2020;
however, despite the positive correlations, the longer-term relationship is not very tight or consistent. For
example, the five relatively low inflation years between 2013 and 2017 showed mostly single-digit inflation
despite the fact that M2 growth in those years was relatively elevated at around 25-30 percent (Figure 3.5A).
• Exploring the relationship more formally using 10 years of quarterly data suggests a modest but not very strong
relationship between monetary growth and inflation (Figure 3.5B). Alternative monetary measures (using net
credit to government and net central bank credit to government) were considered, including with lagged
effects, but the results suggest monetary influences are only one of many determinants of inflation.
Figure 3.5A: Money Supply Growth vs Inflation
Money Supply Growth vs Inflation Start of the

Conflict
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Dec-12
Dec-13
Mar-13
Jun-13
Sep-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Dec-20
Mar-20
Jun-20
Sep-20
Mar-21
Jun-21
Sep-21
Broad money Growth Inflation
Source: CSA, NBE
Figure 3.5B: Inflation vs Money Supply Growth
Inflation vs Money Supply Growth

45%
40%
35%
30%
y = 0.817x - 0.0545
25% R² = 0.2222
20%
15%
10%
5%
0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Source: CSA, NBE

25
Inflation Trends: Longer-term and cross country context
• While Ethiopia tends to experience periodic episodes of inflation, such as in mid-2015 and mid-2018, the current
episode stands out for reaching near decade-long highs, especially since the start of the conflict in Nov 2020.
• From a cross-country context, Ethiopia’s experience also stands out, especially among other Sub-Saharan
African countries facing a similar global environment. Inflation is low and declining, on average, for most of SSA
compared to an upward trend in Ethiopia.
Figure 3.6A: Year on Year Inflation Time Series (%)
Inflation(Y-o-Y)
40% Start of the
Conflict
35%
30%
25%
20%
15%
10%
5%
0%
Jan-12
Nov-14
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Source: CSA
Figure 3.6B: Ethiopia and SSA Average Inflation

Ethiopia and SSA Average Inflation
40%
35% 34%
31%
30%
25%
20% 20%
19%
20% 18%
14% 15%
15% 13%
10%
10% 8% 8% 7%
11%
9%
5%
7%
5% 5% 5% 5%
4% 4% 4%
4% 3% 3%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 *2022
Ethiopia Moving AvgInflation ( %) SSA Annual Inflati on ( %)
Source: CSA,WB, Cepheus Research, * Projections for 2022
26
Inflation Trends: Underlying price levels and price changes across products
• As an illustration of the underlying price level changes driving current inflation, the snapshot below provides
the listing of Addis Ababa’s Consumer Price Index and its 185 commodities. Of these, only 8 items showed price
declines (4 percent), 49 items (27 percent) showed 0-20% percent price increases, 71 items (38 percent) showed
20%-40% percent price increases, and 57 items (31 percent) showed above 40% price increases.
Figure 3.7: Price Levels for Items Used in Computing Inflation: Addis Ababa City Prices for Dec 2021--PAGE 1
Ranked by weight in Addis Ababa CPI
Consumption item in Addis Ababa's Unit of Weight in Price in Price in Change in Change in
Consumer Price Index measure AA CPI December 2020 December 2021 Birr terms Percent
1 Rental of 2 bedrooms, with 24-32 sqm Month 9.97 3,718.0 4,568.7 850.7 23%
2 Telephone charges, per minute Minute 4.99 0.2 0.2 - 0%
3 Beef Kg 4.83 244.4 329.8 85.4 35%
4 Teff' mixed Kg 4.64 40.8 44.8 4.0 10%
5 Taxi fare (Trip) Trip/person 3.31 2.0 2.5 0.5 23%
6 Teff' white Kg 3.06 44.5 49.3 4.8 11%
7 Charcoal (gram) KG 2.68 18.3 19.7 1.4 8%
8 Mutton (Sheep alive) Kg 2.07 2,297.8 3,236.2 938.4 41%
9 Pepper whole Kg 2.04 142.0 265.2 123.2 87%
10 Lentils Kg 1.88 62.6 112.3 49.7 80%
11 Injera 325 gm 1.88 7.4 11.1 3.7 50%
12 Wheat bread (bakery) 350 gm 1.87 9.8 19.7 9.9 101%
13 Fasting meal without fish Single meal 1.80 56.4 72.0 15.6 28%
14 Salary for servants, maid Month 1.78 1,393.8 1,821.8 427.9 31%
15 Electricity KWH 1.75 0.3 0.3 - 0%
16 Peas Kg 1.71 48.6 57.8 9.2 19%
17 Edible oil (Imported) (cc) Litre 1.70 34.1 76.0 41.9 123%
18 Onions Kg 1.56 16.4 26.2 9.8 60%
19 Coffee beans Kg 1.41 160.6 256.1 95.5 59%
20 Edible oil local (cc) Litre 1.36 95.7 139.6 43.8 46%
21 Jeans trousers No. 1.32 558.0 707.4 149.4 27%
22 Laboratory fee (Excluding HIV test) Once 1.22 40.7 45.9 5.3 13%
23 Yebere Keywot’, Beef stew Single meal 1.06 71.0 96.5 25.4 36%
24 Toyota Corolla Used Imported No. 1.06 769,740.2 769,740.2 - 0%
25 Tomato Kg 0.94 24.8 27.9 3.1 13%
26 Tuition Fee (Private), 4-6 years Month 0.93 1,041.8 1,532.5 490.7 47%
27 Sugar Kg 0.91 26.2 34.6 8.5 32%
28 Chicken, Cock alive Kg 0.89 278.7 368.6 89.9 32%
29 Cow Milk (pasteurized) Lt Litre 0.86 31.3 42.6 11.3 36%
30 Beer, (St George, Bedele, Harar... ) 330 cc 0.82 23.3 26.8 3.4 15%
31 Potato Kg 0.77 13.7 14.6 0.9 7%
32 Laundry soaps, local (gram) 200 gm. 0.77 12.4 22.8 10.5 85%
33 Liquide Soups (cc), Largo Lt. 0.74 44.4 71.4 27.0 61%
34 Coca Cola 300 cc 0.71 13.6 16.1 2.5 19%
35 Motor Fuels, Benzene Lt. 0.69 21.9 31.7 9.9 45%
36 "Tegamino" Single meal 0.69 49.7 61.1 11.4 23%
37 Butter unrefined (gram) Kg 0.68 298.9 428.1 129.2 43%
38 "Kornis/ Obama" meal Single meal 0.66 90.0 90.0 - 0%
39 Teff' black Kg 0.66 37.7 42.2 4.5 12%
40 Spaghetti Kg 0.65 41.2 58.1 16.9 41%
41 Hair dressing, normal without dye Service 0.65 63.1 78.2 15.1 24%
42 Eggs/indigenous (No.) Dozen 0.63 67.6 93.7 26.1 39%
43 Water 1st Tariff (Gov't) Cubic meter 0.62 1.8 1.8 - 0%
44 Garlic Kg 0.57 102.2 78.6 (23.6) -23%
45 Mixed pulses, milled Kg 0.55 84.2 101.7 17.5 21%
46 ‘Kemis’ and Netela’ No. 0.51 1,871.6 2,346.2 474.6 25%
47 Bus fare (within town),10 km, one way Trip/person 0.50 2.3 2.7 0.4 19%
48 Barbery, men Service 0.48 31.3 41.6 10.3 33%
49 Shoes, Leather (local), women Pair 0.47 409.8 522.8 113.0 28%
50 Mobile Apparatus(Techno) No. 0.43 614.0 774.6 160.6 26%
51 Shirts (long sleeved imported) No. 0.43 410.4 491.9 81.5 20%
52 Wheat Flour (factory processed) Kg 0.42 29.8 46.8 17.0 57%
53 Cup of coffee Cup 0.41 11.3 12.3 1.0 8%
54 Doctor’s fee, Private Visit 0.41 77.2 86.9 9.7 13%
55 Shoes, Leather (local), men Pair 0.40 564.3 736.3 172.1 30%
56 T - Shirt No. 0.40 320.7 406.9 86.2 27%
57 Sofas, Wanza, 7 seat No. 0.39 19,640.2 25,627.5 5,987.3 30%
58 Toilet soaps (gram), GIV 80 gram 0.38 10.2 11.6 1.4 14%
59 "Tibs", beef , Yebere Single meal 0.38 73.1 91.7 18.6 25%
60 Laundry soaps, imported (gram) 200 gm. 0.37 15.8 44.6 28.8 182%
61 Ethiopian Kale Kg 0.36 17.6 19.0 1.4 8%
62 Modess, (Roll) Roll 0.35 25.0 35.5 10.5 42%
63 Yebeg Tibs’, mutton roasted, Sheep Single meal 0.33 97.3 130.9 33.6 35%
64 Jeans trousers for boys No. 0.32 381.4 495.1 113.7 30%
65 Spaghetti (pasta) with bread Single meal 0.31 46.9 59.0 12.1 26%
66 Color Television 23/24 Inch Flat screen No. 0.31 5,517.8 9,746.8 4,228.9 77%
67 Zenit (cc), liquid 80 cc 0.29 37.7 55.6 17.8 47%
68 Shoes, Leather (Local), boys Pair 0.29 421.2 503.8 82.6 20%
69 Cooking pan No. 0.28 156.0 216.3 60.2 39%
70 Exercise books, 50 leaves No. 0.28 20.0 31.7 11.7 58%
71 Refrigerator, medium size, 750 cc No. 0.28 19,799.0 29,210.0 9,411.1 48%
72 Banana Kg 0.27 25.8 35.8 9.9 38%
73 Kerosine (cc) Lt. 0.27 19.1 28.9 9.9 52%
74 Rice Kg 0.26 30.2 42.1 11.9 39%
75 Candles (No.) No. 0.26 7.2 8.8 1.7 23%
76 Toilet paper (Roll) Roll 0.23 14.4 17.3 2.9 20%
77 Cabbage Kg 0.23 13.5 15.0 1.5 11%
78 Barley White Kg 0.23 28.4 55.0 26.6 93%
79 Macaroni Kg 0.23 32.4 48.3 15.9 49%
80 ‘Chat’ Kg 0.22 189.4 210.1 20.7 11%
81 Shoes, Canvas (imported), women Pair 0.22 316.0 422.3 106.2 34%
82 Rings, 4gm 18 Karat Gold, Local No. 0.22 10,936.3 13,560.1 2,623.8 24%
83 Kitfo’, Minced and spiced Beef Single meal 0.22 184.1 283.8 99.8 54%
84 Tea leaves Kg 0.21 11.7 14.9 3.2 28%
85 Keywot’ mutton/Goat, stew Single meal 0.21 81.8 106.9 25.0 31%
86 Pepper green Kg 0.21 57.0 73.9 16.9 30%
87 Amoxycillin (No) 16 capsuls 0.20 27.5 65.4 37.9 138%
88 School Uniform For Boys No. 0.20 462.1 714.0 252.0 55%
89 Detergent soaps, imported (gram) 50 gm. 0.20 7.9 10.4 2.4 30%
90 Firewood chopped, KG KG 0.20 4.6 6.2 1.5 33%
91 Cough syrup ( Bottle), Ephadex 125 cc 0.19 48.3 58.2 9.9 20%
Continued on next page…
27
Inflation Trends: Underlying price levels and price changes across products, part 2
Continued from previous page…
Figure 3.7: Price Levels for Items Used in Computing Inflation: Addis Ababa City Prices for Dec 2021--PAGE 2
92 "Bozena shiro" Single meal 0.19 53.0 84.3 31.3 59%

93 Deodorant for men/female 330 cc 0.18 100.4 158.1 57.8 58%
94 Salt Kg 0.18 12.0 15.9 3.9 33%
95 Shoes, Canvas (imported), men Pair 0.17 369.8 518.6 148.8 40%
96 Woolen suit No. 0.17 3,139.1 3,851.8 712.7 23%
97 Gov't University Fee(Night) Month 0.17 90.0 90.0 - 0%
98 Doro "wot" ( Chicken stew) Single meal 0.17 85.0 203.5 118.5 139%
99 Sand Meter cube 0.16 624.1 835.4 211.2 34%
100 Shoes, Leather (imported), men Pair 0.16 3,149.6 3,562.6 413.0 13%
101 "Kikil" mutton /Goat (No) Single meal 0.16 74.7 111.0 36.3 49%
102 Carrot Kg 0.16 25.0 24.9 (0.1) -1%
103 Cottage cheese (gram) Kg 0.16 115.5 163.8 48.3 42%
104 Text books (No), Grade 8 Maths text No. 0.16 41.4 46.9 5.4 13%
105 Perfume (cc) 100 cc 0.16 153.9 124.9 (29.0) -19%
106 Broom (No) No. 0.16 58.6 74.1 15.5 27%
107 Tooth pastes (gram) 50 gm. 0.15 28.0 31.9 3.9 14%
108 Cup of tea (No) Cup 0.15 6.5 7.3 0.9 13%
109 Chick peas Kg 0.14 37.7 60.9 23.2 62%
110 Lettuce Kg 0.14 43.0 53.0 10.0 23%
111 Detergent soaps, local (gram), Omo 200 gm. 0.14 15.8 18.4 2.6 16%
112 Powdered Milk or Nestile Kg 0.14 209.8 299.3 89.6 43%
113 Shampo any type (cc) 400 cc 0.13 47.6 56.7 9.1 19%
114 Pants No. 0.13 320.7 406.9 86.2 27%
115 Bufee, Chest of Drawers No. 0.13 4,891.3 5,551.0 659.7 13%
116 Salary for guards Month 0.12 1,337.6 1,705.1 367.5 27%
117 Beds, Wanza, 120 cm No. 0.12 6,517.4 8,521.6 2,004.3 31%
118 Conditioner any type (cc) 400 cc 0.12 48.3 56.1 7.8 16%
119 ‘Tella’, refined, home prepared Lt. 0.12 14.1 28.0 13.9 98%
120 Unskilled daily Labourer Day 0.12 147.2 192.1 44.9 31%
121 Lotion any type for men and woman 400 cc 0.12 99.9 130.0 30.1 30%
122 "Kikil" (beef), Yebere Single meal 0.12 69.3 130.0 60.7 88%
123 Shoe Polish (Service) Service 0.12 7.4 11.1 3.8 52%
124 Socks No. 0.11 35.8 44.4 8.5 24%
125 "Quanta firfir with Injera" Single meal 0.11 66.1 93.6 27.5 42%
126 Biscuits 150 gm 0.11 9.4 15.3 5.9 63%
127 Wheat white Kg 0.10 26.3 42.8 16.5 63%
128 Charges for money transfers Service 0.10 23.0 23.0 - 0%
129 Tight No. 0.10 166.2 223.0 56.7 34%
130 "Dulet", mutton (No), yebeg Single meal 0.10 62.2 98.7 36.5 59%
131 Electric stove, China No. 0.10 469.5 745.1 275.6 59%
132 Motor oil (kg) Kg 0.10 155.3 197.1 41.8 27%
133 Goat Meat Kg 0.10 434.7 427.5 (7.2) -2%
134 Whisky 900 CC 0.10 1,496.8 2,567.7 1,070.9 72%
135 Cupboards, wanza, Twin door No. 0.09 6,984.0 9,029.7 2,045.8 29%
136 Hand bag for women, synthetic No. 0.09 406.6 541.7 135.1 33%
137 Tables No. 0.09 5,014.5 7,137.8 2,123.2 42%
138 Orange local Kg 0.09 62.1 66.7 4.6 7%
139 "Dulet" (beef), Yebere Single meal 0.09 69.7 95.9 26.2 38%
140 Mattress-Sponge (Local) 120cm x 16cm No. 0.09 2,660.8 3,379.6 718.8 27%
141 Mineral water, Ambo 500 cc 0.09 14.0 16.0 2.0 14%
142 Day School Fee-Private(Gr.11-12) Month 0.08 1,349.8 1,811.2 461.4 34%
143 Macaroni with bread Single meal 0.08 43.4 45.7 2.3 5%
144 Private University Fee(Day) Month 0.08 152.3 164.8 12.5 8%
145 Horse beans Kg 0.08 45.5 53.8 8.4 18%
146 Wine (bottle) (cc), Saris wine 750 cc 0.08 117.5 143.9 26.4 22%
147 Horse bean sauce("Ful,Ful special") Single meal 0.08 50.1 51.8 1.6 3%
148 Corrugated iron sheets No. 0.08 215.7 349.3 133.6 62%
149 Bed covers (No.) No. 0.08 1,032.0 1,465.7 433.7 42%
150 Bed sheet - Kombolcha, patterned Pair 0.08 556.5 698.7 142.2 26%
151 Avacado Kg 0.08 26.5 40.2 13.7 51%
152 Emmur wheat (cotted), unshelled Kg 0.08 100.5 93.5 (7.0) -7%
153 Paraffin (cc) 300 cc 0.08 47.2 61.7 14.6 31%
154 Door set complete with glass No. 0.08 2,788.7 4,358.9 1,570.2 56%
155 Incense (gram) Kg 0.07 307.6 370.6 63.0 20%
156 Cinema ticket (Ticket) Ticket 0.07 45.7 44.7 (1.0) -2%
157 Curtains (No.) Meter 0.07 208.3 297.7 89.4 43%
158 Scrabled egg (Enkulal firfir) Single meal 0.07 47.2 58.6 11.4 24%
159 Blanket, Debre Birhan 160cm.x220cm No. 0.07 492.8 659.7 166.9 34%
160 Night School Fee-Gov't(Gr.11-12) Month 0.07 104.1 103.8 (0.4) 0%
161 Plastic mat, medium, China Meter 0.07 97.2 123.8 26.6 27%
162 Burger/ Club sandwitch Single meal 0.07 81.4 109.9 28.5 35%
163 Cement 50 Kg 0.07 253.8 313.3 59.5 23%
164 Electric mitad, full aluminium No. 0.07 2,299.8 2,779.4 479.6 21%
165 Laptop Computer HP CORE i3 RAM-4GB No. 0.07 22,000.0 21,248.5 (751.5) -3%
166 ‘Netela’ No. 0.07 388.9 454.4 65.4 17%
167 Shirts (short sleeved imported) No. 0.06 388.2 458.8 70.7 18%
168 Nifas silk paint, Normal 4 Kg 0.06 266.9 396.4 129.5 49%
169 Football matches entrance fee (Ticket) Ticket 0.06 10.0 10.0 - 0%
170 Car Washing and Greasing Service 0.06 114.7 137.2 22.5 20%
171 Sweater (Imported) No. 0.06 505.9 657.3 151.4 30%
172 Mekermia / Yeaderye netela Mutsen No. 0.06 263.9 383.8 119.9 45%
173 Nyala 20 PCs. 0.06 35.7 37.0 1.3 4%
174 Bedroom rental, 1st class, No star hotel Night 0.06 276.9 310.2 33.4 12%
175 Shoes, Canvas (local), men Pair 0.06 388.8 388.8 - 0%
176 Walking shoes (imported) non-leather (synthetic),
Pair men 0.06 622.7 856.3 233.6 38%
177 Umbrella for women, imported No. 0.05 159.9 236.9 77.0 48%
178 Matches (Box) Box 0.05 1.6 2.0 0.4 26%
179 Spinach Kg 0.05 15.6 16.7 1.1 7%
180 Maize Kg 0.05 16.6 28.4 11.9 72%
181 "Bula" flour Kg 0.05 66.7 103.4 36.7 55%
182 Beet root Kg 0.05 15.4 18.4 3.0 19%
183 Wheat bread (traditional) 350 gm 0.05 15.3 18.9 3.6 23%
184 Shirts (long sleeved local) No. 0.05 290.0 378.0 88.0 30%
185 Fish fresh without internal organ Kg 0.05 100.8 198.1
Simple average (unweighted): 33%
Source: Cepheus Research compilation based on CSA, December 2021 Consumer Price Report
28
Inflation Trends: Underlying sources by product and other categories
• A breakdown of inflation by key components shows: (1) the strong dominance of food rather than non-food
items; (2) the larger role of goods rather than services; and (3) the dominant role of ‘domestically produced and
domestically consumed items’ vs other categories such as export goods or imported goods.
Figure 3.8A: FOOD vs NON-FOOD percentage point contribution to inflation
FOOD vs NON-FOOD percentage point contribution to inflation

35%
35% 35%
34%
33%
30%
30%
12% 12%
12%
26% 12%
25% 25% 10%
23% 23%
22%
22% 22%
20% 9%
21% 21%
21% 20% 20% 20%
20% 19% 19% 19% 19% 19% 9%
19% 19% 19%
18%
18% 8% 9%
16% 9%
8%
15% 15% 9%
7% 9% 8% 9% 7%
7% 6% 8% 7% 7%
7% 9% 7% 7%
15% 5% 7% 7%
6%
11% 13% 6% 5%
11%
11% 23% 22% 22%
5% 21%
10% 20%
6%
5% 17%
5% 16%
15% 14%
13% 14% 13% 13%
12% 13% 13% 12% 12% 12% 12% 11% 13% 12% 12% 12% 12% 12% 12%
11% 11% 11% 11%
5%
8%
6% 6% 6%
0%
M 9
19
M 0
20
M 1
21
9
1
19
20
21
9
1
M 9
19
M 0
20
M 1
21
1
9
1
19
20
21
1
9
1
-1
-2
-2
1
-1
-2
-2
-1
-1
-2
-2
-2
-2
-1
-2
-2
l-1
l-2
l-2
n-
n-
n-
b-
r-
p-
b-
r-
p-
b-
r-
p-
g-
g-
g-
n-
n-
n-
ov
ov
ov
ay
ay
ay
ct
ct
ct
ec
ec
ec
ar
ar
ar
Ju
Ju
Ju
Ap
Ap
Ap
Ja
Ja
Ja
Fe
Se
Fe
Se
Fe
Se
Au
Au
Au
Ju
Ju
Ju
O
O
N
N
D
D
Percenta ge Point contribution of Food to infla tion Percenta ge Point contribution of non food to infla tion Total
Source: CSA, Cepheus Research
FIgure 3.8B: Four Analytical Catagories of Inflation
Four Analytical Catagories of Inflation

35% 35%
35% 34%
33%
31% 6%
7%
6%
30% 6%
27% 5%
25%
25% 4%
9% 8%
22% 22% 22% 8%
21% 22% 5% 8%
21% 21% 8%
20% 20% 20%
19% 19% 19% 20% 20% 20%
20%
18% 18% 18% 6% 6% 19% 18% 7%
18% 6% 7% 5%
16% 5% 7%
4% 6% 4% 4% 5%
6% 4% 4% 6% 5% 6%
15% 15% 4% 4% 5% 7% 4% 6%
3% 5% 5% 4%
15% 3% 2% 2%
1%
13% 3% 3% 2% 2% 2% 2% 3% 3% 4% 5%
2%
2% 2% 2% 2% 2% 2% 2% 3% 3% 4%
1% 3%
11% 11% 11% 2% 3% 2% 5% 4%
3% 4% 6%
5% 5% 3% 4% 4% 4% 4% 3% 3%
10% 2% 3% 3% 2% 5% 5% 4% 4% 4% 4%
3% 3%
5% 4% 3% 4%
2% 15% 15%
3% 2% 3% 13% 14% 13% 14%
1% 11%
5% 1% 2% 10% 10% 9%
9% 9% 9% 8% 8% 8% 9% 8% 8% 8% 9% 8% 8%
8% 8% 8% 8% 7% 8%
5% 6% 6% 7%
4% 4% 5%
0%
Jan-19
Feb-19
Jun-19
Jul-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Jun-20
Jul-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Oct-21
Jun-21
Jul-21
Sep-21
Nov-21
Dec-21
Apr-19
Aug-19
Apr-20
Aug-20
Apr-21
Aug-21
Mar-19
May-19
Mar-20
May-20
Mar-21
May-21
Domesti cally Produced and Domesticall y Consumed Domesti cally produced but also heavily exported Import-Heavy Commodities Services Inflation
Source: CSA, Cepheus Research
29
Section 4: Banking performance
• The banking sector continued to show a strong and resilient performance last year, despite multiple shocks from
COVID, the conflict, and a challenging regulatory environment.
• The underlying basis for this positive performance is the banking sector’s substantial expansion of lending to the
overall economy, which suggests strong underlying demand from private sector businesses.
• Conflict impacts have been concentrated in a few banks. The stock of NPLs across of the 16 private banks was near
Birr 23bn against a loan balance of Birr 507bn, equivalent to a system-wide ratio of just under five percent.
The banking sector has come out of both COVID pandemic and the recent conflict in relatively good shape and its
performance in the fiscal year ending June 2021 was generally satisfactory. Other than a few exceptions, banks enjoyed
strong growth in deposits, loans, profits and shareholder returns. Among the notable developments in the sector:
• Bank balance sheets: Total bank deposits reached Birr 1.36 trillion (31 percent of GDP) in June 2021, or a 30 percent
increase from the year before. The large deposit growth helped fund a 37 percent rise in loans, from Birr 590mn to
Birr 809mn; other uses of deposits—besides loans—includes bonds held by commercial banks (445bn), NBE Bills
(80bn), and T-Bills (54bn). Banks’ paid-up capital base reached Birr 95bn as of June 2021 or 5% of total assets. Loan-
to-Deposit ratios of 80% as of June 2021 were at record highs and, given reserve requirements and precautionary
cash needs, indicative of banks’ having effectively deployed virtually all their deposits towards lending activities.
• Income statements: Net interest income still forms the core source of banks’ earnings, totalling Birr 72 bn for
all commercial banks. Other income, mainly fx fees, provided an additional Birr 36bn of income, for total gross
income of above Birr 100mn. Profits (before taxes) reached Birr 20.4bn at private banks and Birr 19.3bn at the
CBE. In dollar terms, the banking sector’s profit pool now exceeds $1bn (given 39.4 year-average exchange rate).
• Margins: Lending spreads have remained in the 7-8 percent rate at private banks and around 4 percent at CBE.
For 2020-21, private banks had a 13.4 percent effective lending rate, a 5.3 percent effective deposit rate, and
thus a spread of 8.1 percent. CBE showed a 8.8%/5.0% effective lending/deposit rates for a spread of 3.8%.
• NPLs: Non-performing loans remain below 5 percent at all but a few banks. For the private banking sector as a
whole, their stock of NPLs is near Birr 24bn, against a loan book of near Birr 500bn and total capital of Birr 95bn.
• Shareholder returns: The earnings per share (EPS) at private banks dropped notably from 34 percent two years
ago to 28 percent last year, reflecting an increase in their paid-up capital base that has not been matched by
growth in profits. Reflecting high inflation, the sector’s average real EPS return fell below 10 percent last year.
• Market shares: Private banks’ collective market share continues to trend up, reaching 46 percent for deposits.
For a second year in a row, private banks collectively reported a slightly higher profit (51%) versus CBE.
Current year trends and outlook: While most of the above represent 2020-21 outturns, the most recent six month
period (July-December) has brought a more challenging environment, including a credit freeze put in place in July 2021
(subsequently reversed), an increase in reserve requirements, and a change in fx surrender rules that now call for banks
to sell 70 percent—instead of 50 percent—of their fx inflows. Still, with an ability to boost lending for the remainder of
the year, most banks remain well-placed to weather these as they benefit from high credit demand, healthy lending
spreads, fee-based income streams (for those with strong fx flows), and generally low NPL/provision expenses.
30
Recent performance of Private Banks: Deposits, Loans, Capital and Branch Networks
• Despite covid and the conflict, private banks continued to perform strongly in FY 2020-21 across most metrics—
including on deposits, loans, capital increases, and outreach expansion via branches/staffing.
• Loans rose by Birr 163bn for the fiscal year, funded by a Birr 178bn increase in deposit mobilization.
Figure 4.1A: Deposits at Private Banks (Birr bns) Figure 4.1B: Loans at Private Banks (Birr Bns)
Loans and Advances
507
Deposits 495
627
445
585
395
343
485 449 345
295
251
385 360 245
195 179
279
285 133
145
202 91
95 75
185 147 53
118 45
92
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
85
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Source: Banks Annual Reports and NBE Source: Banks Annual Reports and NBE
Figure 4.1C: Paid-Up Capital at Private Banks (Birr bns) Figure 4.1D: Total Capital at Private Banks (Birr bns)
Fig 3A: Paid-Up Capital at Private Banks Total Capital

60 100
55
91
90
50
42 80 73
40 70
33 57
60
30 26 50 44
21 40 33
20 16
13 30 26
11 21
18
10 20
10
- 0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Figure 4.2A: No. of Branches at Private Banks

Figure 4.2B: No. of Employees at Private Banks
No. of Branches
5,034 No. of Employees
5,000 77,851
4,366 77,300
4,500 70,255
4,000 3,734 67,300

58,788
3,500 3,162 54,776
57,300
3,000 2,658
2,500 47,300 43,574
2,008
2,000 37,396
1,535 37,300 32,171
1,500 1,159 27,324
1,000 27,300
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
31
Recent performance of Private Banks: Profits, Return on Assets, and Return on Equity
• Pre-tax profits rose to record levels of Birr 20.4bn at private banks and Bir 19.3bn at CBE, for a combined sum
of near Birr 40bn. With these profits, their combined tax dues amounted to Birr 12bn last year, or an effective
rate of 30 percent.
• Profits were equal to 2.3 percent of year-average assets (ROAA), and 16.6 percent of year-average total capital
(ROAE). Both represent trend declines from recent years and reflect the fact that profit growth has not kept up
with capital/asset growth at most banks. The declines are also suggestive of lower fee-based income growth at
most banks due in part to more challenging fx conditions.
Figure 4.3: PBT, and PAT at Private Banks Figure 4.4: Earnings Per Share at Private Banks
PBT, & PAT est. (Birr bns) Earnings per share (Percent)
23.0 35.0
20.4 34.0 33.7
21.0 33.2
19.0 17.1 33.0
17.0 32.0
14.7 31.1 31.2
15.0 14.0 30.8
13.4 31.0
13.0
10.5 10.7 30.0 29.5
11.0
9.0 8.1 29.0 28.4 28.3
7.6
7.0 5.8 5.7 28.0
5.4
4.7 4.1 4.5
5.0 3.6 27.0
3.0 26.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
25.0
Profit before tax (Birr bns) Profit after tax (Birr bns) 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Figure 4.5: Return on Average Assets at Private Banks (RoAA)

Figure 4.6: Return on Average Equity at Private Banks (RoAE)
RoAA
RoAE
3.5
21.0 20.5 20.3 20.4
3.3 20.2 20.1
3.3 19.7
3.1 20.0
3.1
2.9 19.0
2.9 2.8 17.8
2.8 18.0
2.7 2.6 17.0 16.6
2.5 16.0
2.3
2.3 15.0
2.1 14.0
1.9 1.7 13.0
1.7 12.0
1.5 11.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
32
Recent performance of Private Banks: Underlying sources of strong performance
• Last year’s results were driven by a greater deployment of mobilized deposits, as seen from loan-deposit ratios
reaching 80 percent as of June 2021 from just 64 percent three years ago.
• Adjusted loan-deposit ratios (taking into account banks’ reserve requirements and need for precautionary cash
balances) are now above 100 percent for the second year in a row, and show very limited scope to engage in
additional lending beyond recycling repayments on past disbursed loans (as opposed to by deploying a higher
share of already mobilized deposits).
Figure 4.7: Loans to Deposits Ratio at Private Banks
Loans to Deposits Ratio (Percent)

86.0
81.0
80.3
76.0
75.0
71.0
68.9
64.0 64.5
66.0
64.1
61.0
63.4
57.2
56.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Source: Banks Annual Reports and NBE
Figure 4.8: Adjusted Loans to Deposits Ratio at Private Banks
Adjusted L/D Ratio* (Percent)

106.0
104.0 104.2
102.0
101.0
100.0
98.0 98.4
97.2
96.0
95.5
94.0 94.0
93.0
92.0
90.0
88.0
87.5
86.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

*Adjusted for reserve requirements and banks' holdings of NBE Bills & T-Bills.
33
Recent performance of Private Banks: Underlying sources of strong performance, part 2
• The private banking sector continues to benefit from comfortable lending spreads, with effective lending rates
at 13.4 percent, effective deposit rates at 5.3 percent, and a spread of 8.1 percent. The spread has been rising
since 2015 (when it was closer to 5 percent) but remains well below rates of inflation.
• Also supporting banks’ strong underlying performance has been a cost-to-income ratio that is still favorable
from a cross-country perspective, even though it has risen notably in the last two years from 39 percent to 46
percent, reflecting large branch/staff expansions, IT deployments, and higher compensation expenses.
Figure 4.9: Lending rates, deposit rates, and spread at Private Banks
Lending rates, Deposit rates, and Spread (Percent)

16.0
15.3
14.0
13.4
12.8
12.0 12.0 11.9 12.0
10.2 10.5 10.4

10.0
8.0 8.1
7.7
7.4 7.2
6.8
6.5
6.0
5.5
5.0 5.3
5.0 4.8
4.5
4.0 3.9
3.2 3.4
2.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Effective Deposit Rate Effective Lending Rate (incl Bills) Spread
Source: NBE and Banks Annual Reports
Figure 4.10: Costs to Income Ratio at Private Banks
Costs (excluding interest) to Income Ratio, %

48.0
45.9
46.0
44.9
44.0
42.0 41.7 41.7

41.0 40.9 41.0
40.0
38.6
38.0
36.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Source: Banks Annual Reports, and NBE
34
Recent performance of Private Banks: Underlying sources of strong performance, part 3
• Seen over a longer-term perspective, and applying a Dupont analysis to banks’ underlying earnings, the primary
contributors to the strong returns of Ethiopian banks continues to be their sizeable net interest margins (near
6% of assets), significant other income (3.3% of assets) and generally low operation costs and provisions.
• Most banks rely heavily on net interest income, but about a fifth of private banks have a greater reliance on
other income (reflecting fee-based, mostly fx-related businesses).
• Long-standing structural features of the banking system continue to work in most banks’ favor: excess demand
for credit and foreign exchange gives banks relatively strong pricing power in both areas and a reliance (for the
most part) on collateral-based lending practices makes possible relatively low provision related expenses.
Figure 4.11A: Dupont Analysis for Private Banking Sector
Dupont Decomposition 2013 2014 2015 2016 2017 2018 2019 2020 2021
Interest income to Assets 5.8% 6.2% 6.7% 7.3% 7.1% 8.4% 8.0% 9.5% 10.0%
Interest cost to Assets -2.3% -2.3% -2.5% -4.9% -2.9% -3.5% -3.8% -3.9% -4.1%
Net interest income to Assets 3.5% 3.9% 4.1% 3.2% 4.3% 4.9% 4.7% 5.6% 5.9%
Other income to Assets 4.8% 4.9% 4.7% 4.4% 4.3% 3.7% 2.6% 3.3% 3.3%
Operating income to Assets 8.3% 8.8% 8.8% 7.5% 8.6% 8.6% 8.6% 8.9% 9.2%
Operational costs to Assets -3.5% -4.3% -4.5% -4.5% -4.9% -4.7% -4.2% -5.0% -5.5%
Operational profit to Assets 4.2% 4.5% 4.3% 4.4% 3.7% 3.8% 3.1% 3.8% 3.7%
Provisions to Assets -0.5% -0.3% -0.2% -0.4% -0.3% -0.2% -0.2% -0.2% -0.6%
Profits-Before-Tax to Assets 3.8% 4.2% 4.1% 4.0% 3.4% 3.6% 3.1% 3.6% 3.1%
Taxes to Assets -1.1% -0.9% -1.0% -0.9% -0.8% -0.9% -0.7% -0.8% -0.8%
Profits-After-Tax to Assets (ROAA) 3.2% 3.3% 3.1% 1.7% 2.6% 2.8% 2.9% 2.8% 2.3%
Leverage ratio (Assets to total equity) 6.8 6.4 6.5 6.8 7.2 7.4 7.8 7.3 7.7
Profits to Equity (ROAE) 21.6% 20.5% 19.7% 20.3% 17.8% 20.2% 20.4% 20.1% 16.6%
Total Equity to Paid-up Equity 1.67 1.52 1.56 1.45 1.60 1.54 1.65 1.66 1.64
Earnings Per Birr 1,000 Share 36.0% 31.1% 30.8% 29.5% 28.4% 31.2% 33.7% 33.4% 27.2%
Source: Cepheus Research compilation based on Banks' Annual Reports
Figure 4.11B: Dupont Analysis: Bank by Bank Analysis for FY 2020-21
Awash Dashen Abyssinia Wegagen NIB United CBO Lion Zemen OIB Bunna Berhan Abay Addis Enat Debub
Gross interest income to Assets 9.1% 20.9% 9.8% 10.1% 10.8% 10.4% 8.1% 11.5% 8.2% 10.0% 11.6% 10.6% 9.8% 8.6% 10.0% 11.3%
Gross interest expense to Assets -3.0% -7.8% -3.4% -3.8% -4.2% -4.4% -3.0% -4.8% -3.4% -3.7% -4.0% -4.2% -3.2% -4.7% -6.7% -5.4%
Net interest income to Assets 6.1% 13.1% 6.4% 6.3% 6.6% 6.0% 5.1% 6.7% 4.8% 6.3% 7.5% 6.4% 6.6% 3.9% 3.3% 6.0%
Other income to Asssets 3.5% 6.0% 3.2% 2.8% 1.2% 2.2% 3.9% 1.1% 4.9% 1.9% 3.1% 3.7% 3.3% 6.5% 2.9% 6.3%
Operating income to Assets 9.6% 19.1% 9.6% 9.1% 7.9% 8.2% 9.0% 7.8% 9.7% 8.3% 10.7% 10.1% 9.8% 10.4% 6.1% 12.3%
Operating expenses to Assets -4.7% -12.1% -6.2% -6.6% -4.4% -4.9% -6.1% -4.5% -3.5% -5.2% -5.8% -7.2% -4.8% -5.5% -3.6% -9.2%
Operating profit to Assets 4.9% 7.0% 3.4% 2.5% 3.5% 3.3% 2.9% 3.2% 6.2% 3.1% 4.9% 3.0% 5.0% 4.9% 2.6% 3.1%
Provisions to Assets -0.5% -0.7% -0.8% -2.0% -0.1% -0.3% -0.3% -1.9% -0.3% -0.1% -0.7% -1.6% -0.4% -0.1% -0.3% -0.4%
Profit before tax to assets 4.4% 6.4% 2.6% 0.5% 3.4% 3.0% 2.5% 1.3% 5.9% 3.0% 4.2% 1.4% 4.6% 4.8% 2.2% 2.7%
Taxes to assets -1.3% -1.8% -0.9% -0.2% -0.8% -0.8% -0.6% -0.2% -1.6% -0.7% -1.2% -0.6% -1.2% -1.3% -0.5% -0.7%
Profit after tax to assets (ROAA) 3.1% 4.5% 1.7% 0.3% 2.5% 2.1% 2.0% 1.0% 4.4% 2.3% 3.0% 0.8% 3.4% 3.5% 1.8% 2.0%
Leverage ratio (assets/total equity) 7.8 4.1 11.2 7.7 7.6 8.2 11.0 9.0 5.7 7.5 6.5 6.7 6.9 5.2 6.7 6.1
Return on equity (ROAE) 24.4% 18.7% 18.7% 2.5% 19.0% 17.5% 21.7% 9.4% 25.1% 17.3% 19.5% 5.4% 23.2% 18.2% 11.9% 12.3%
Effective Total to Paid-Capital Ratio 1.9 2.5 2.1 1.7 1.6 1.7 1.8 1.5 1.9 1.6 1.5 1.4 1.4 1.4 1.3 1.4
Earnings per share, estimated 47.0% 47.1% 39.1% 4.2% 30.8% 28.9% 40.0% 14.4% 46.9% 27.0% 29.3% 7.4% 33.4% 25.0% 15.8% 16.6%
Source: Cepheus Research based on Banks' Annual Reports. Shaded cells show bank with best performance for given line-item
35
Recent performance of Private Banks: NPL trends
• While NPL levels and ratios increased notably this past year, reflecting a combination of COVID and conflict
effects, the increase has been contained to below 5 percent for the industry as a whole.
• Special mention loans (those between 30-90 days overdue) have also remained close to their recent year norms
of near 7 percent of total loans.
• NPL levels are also covered partly by provisions and remain well below banks’ paid-up capital cushions.
Figure 4.12A: Private Banks' Asset Quality and NPL Metrics
2018-19 2019-20 2020-21

Total Loans--private banks, Birr bns 250.3 340.0 507.2
Pass loans 229.6 308.5 456.0
Special mention loans 13.2 21.9 37.2
Non-performing loans 7.6 9.6 23.5
NPL ratio, % 3.0% 2.8% 4.6%
Provisions held 3.4 4.7 8.5
Provisions to NPL ratio, % 45.0% 48.3% 36.1%
Net NPL ratio (after provisions), % 1.7% 1.5% 3.0%
Source: Cepheus Research compilation based on Annual Reports of 16 private banks
Figure 4.12B: Private Banks' NPL Levels vs Paid-Up Capital Bases, Birr bns
Private Banks' NPL Levels vs Paid-up Capital Base

60.0 54.8
50.0
42.1
40.0
32.9
30.0
23.5
20.0
9.6
10.0 7.6
-
2018-19 2019-20 2020-21
Non-performing loans Paid-up Capital, Bi rr bns
Source: Cepheus Research compilation based on Annual Reports of 16 private banks
36
Banking Sector Market Shares: part 1
• Private banks continue to make gains in overall deposit market share, edging up to 46 percent last year versus
43 percent the year before and 34 percent five years ago.
• Incremental deposit gains for the year were again higher at private banks collectively (an increase of Birr 179bn)
compared to that at CBE (an increase of Birr 140bn).
Figure 4.13A: Deposit Levels in 2020-21 at Banks (Birr bns)
800 735
700
627
595
600
500 449
400
300
200 179
140
100
-
Deposit Levels Deposit Increase Last Year
CBE Private Banks
Figure 4.13B: Deposit Market Share Trends at Banks
Deposit Market Share (Percent)

68% 68%
70% 66%
64%
65% 62%
60%
60% 57%
54%
55%
50% 46%
43%
45%
40%
38%
40% 36%
32% 34%
35% 32%
30%
2014 2015 2016 2017 2018 2019 2020 2021
CBE Private Banks
37
Banking Sector Market Shares: Part 2
• Private banks’ collective profits also continued to exceed that of the state bank for a second year in a year, with
pre-tax profits of Birr 20.4bn vs Birr 19.3bn at CBE.
• Taken together the profit pool of the Ethiopian banking system is now near Birr 40bn, or just above $1bn at the
year-average exchange rate. Bank profits are equivalent to just around 1 percent of GDP, not much changed
from recent years.
Figure 4.13C: FY 2019-20 Profit Levels at Private Banks
FY 2020-21 PBT (Birr bns)

45.0
39.7
40.0
35.0
30.0
25.0
19.3 20.4
20.0
15.0
10.0
5.0
0.0
CBE Private Banks Total
Figure 4.13D: Profit Market Share at Private Banks
PBT Market Shares (Percent)

75.0% 70.2% 70.3%
67.4%
70.0%
65.0%
57.5%
60.0% 54.9%
52.9%
55.0% 50.9%
48.6%
50.0%
45.0% 51.4%
49.1%
47.1% 45.1%
40.0%
42.5%
35.0%
30.0%
32.6%
25.0% 29.8% 29.7%
2014 2015 2016 2017 2018 2019 2020 2021
%CBE %Privates
38
Banking Sector: Shareholder Returns, part 1
• Earnings per share at private banks have fallen somewhat to 28 percent last year after remaining comfortably
in the 30 percent range for most of the past decade, and reaching as high as 34 percent two years ago.
• Accounting for last-year’s elevated inflation of near 20 percent, real returns to shareholders have fallen
significantly to 9 percent, one of the lowest levels in almost a decade. Returns on banking nonetheless remain
better-yielding investment alternatives compared to other financial assets (e.g. deposits).
Fig 4.14: EPS Trends at Private Banks, in percent
Earnings per share, in percent

45.0
40.0 38.5
36.5 36.6 36.0
33.7 33.2
35.0
31.0 30.8 31.2
29.5 28.4 28.3
30.0
25.0
20.0
15.0
10.0
5.0
-
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Fig 4.15: EPS Trends in Real Terms at Private Banks
EPS in Real Terms*

25.0
22.9 23.1
22.5
21.2 21.1
19.8
20.0 18.4 18.1
15.0
13.3
10.0 9.0
5.0
2.5
-
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

*EPS returns less year-average inflation for the relevant fiscal year.
39
Banking Sector: Shareholder Returns, part 2
• Seen over a long timeframe, last year’s 28 percent average EPS return is only slightly below the 32 percent
average seen over the past dozen years.
• The dispersion in shareholder returns across banks continues to be quite wide, with some of the best performing
banks on this score seeing EPS returns above 40% against the single-digit returns seen at the lower end.
• The dispersion in returns reflects, in turn, large variations in banks’ size, balance sheet composition, income
sources, lending margins, cost structures, and efficiency metrics—as summarized Fig 4.18, 4.19.
Figure 4.16: Private Banks: Earnings per share over the past dozen years, In percent
Ranked by twelve-year average EPS

Twelve-year
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Average
1 Dashen Bank 60.9 75.3 92.6 82.3 67.0 58.9 48.7 39.2 43.0 40.8 49.0 47.1 58.7
2 Awash Bank 49.3 56.0 46.9 45.6 47.5 44.5 37.1 40.9 54.3 63.2 51.0 47.0 48.6
3 Zemen Bank 38.7 58.1 57.7 41.0 32.1 32.0 35.0 38.4 28.6 39.8 46.2 46.9 41.2
4 Abyssinia Bank 44.7 56.7 54.4 50.2 38.1 27.8 31.5 37.6 24.4 28.9 28.8 39.1 38.5
5 United Bank 47.7 52.8 52.8 47.7 34.1 29.8 32.4 27.2 35.4 39.2 29.8 28.9 38.1
6 Coop Bank of Oromia 17.0 29.0 45.0 52.0 61.0 50.0 4.4 22.0 42.0 36.4 47.0 40.0 37.1
7 NIB Bank 37.6 38.0 34.4 29.4 28.6 27.4 25.8 31.4 26.8 30.8 33.2 30.8 31.2
8 Lion Bank … 17.6 24.4 31.5 23.6 42.5 47.9 31.2 30.2 38.0 33.6 14.4 30.4
9 Wegagen Bank 38.0 44.8 37.8 33.0 26.1 24.4 22.2 28.0 36.5 25.6 31.3 4.2 29.3
10 Oromia Intl Bank 12.3 20.5 14.8 19.2 31.0 36.4 31.0 27.8 52.5 37.4 32.0 27.0 28.5
11 Bunna Bank … 10.7 13.3 21.1 22.8 28.7 34.0 24.2 28.6 28.7 22.5 29.3 24.0
12 Berhan Bank … 17.5 20.6 20.5 23.9 20.7 39.9 32.8 20.4 24.7 25.9 7.4 23.1
13 Abay Bank … -2.5 12.2 14.4 16.3 27.2 23.1 22.9 28.4 34.3 27.0 33.4 21.5
14 Debub Global Bank … … … … 9.1 6.6 22.8 17.4 13.1 32.3 34.7 16.6 19.1
15 Addis International Bank … … 5.7 15.9 19.6 18.7 19.3 18.7 17.1 20.7 22.5 25.0 18.3
16 Enat Bank … … … … 14.9 16.4 16.8 14.9 18.4 18.5 16.1 15.8 16.5
Average 38.5 36.5 36.6 36.0 31.0 30.8 29.5 28.4 31.2 33.7 33.2 28.3 32.8
Median 38.7 38.0 36.1 32.2 27.4 28.3 31.3 27.9 28.6 33.3 31.7 29.1 31.9
Older six 46.4 53.9 53.1 48.0 40.2 35.5 33.0 34.1 36.7 38.1 37.2 32.8 40.8
Newer ten 22.7 21.5 24.2 27.0 25.4 27.9 27.4 25.0 27.9 31.1 30.8 25.6 26.4
Maximum 60.9 75.3 92.6 82.3 67.0 58.9 48.7 40.9 54.3 63.2 51.0 47.1 61.9
Minimum 12.3 -2.5 5.7 14.4 9.1 6.6 4.4 14.9 13.1 18.5 16.1 4.2 9.7
Fig 4.17: Private Banks: Earnings Per Share (In Percent), June 2021
Earnings per share (Percent)

Dashen 47.1
Awash 47.0
Zemen 46.9
CBO 40.0
Abyssinia 39.1
Abay 33.4
NIB 30.8
Bunna 29.3
Hibr et 28.9
OIB 27.0
Addis 25.0
Debub 16.6
Enat 15.8
Lion 14.4
Ber han 7.4
Wegagen 4.2
3.0 8.0 13.0 18.0 23.0 28.0 33.0 38.0 43.0 48.0

40
Banking Sector: Private Banks’ Overview—Individual Banks’ Performance in FY 2020-21, part 1
Figure 4.18A: Private Banks Overview: FY 2020-21
Balance Sheet AIB DB BOA WB NIB UB CBO LIB ZB OIB Bunna Berhan Abay Addis Enat DGB
Assets 128,695 94,697 103,850 39,656 54,199 54,094 81,321 32,204 25,150 41,691 25,946 26,919 29,999 8,873 14,623 11,628
Loans and Advances 86,033 61,650 75,452 26,037 34,218 35,546 53,600 19,082 14,027 24,944 17,936 17,061 19,867 4,493 8,965 8,292
NBE Bills 9,916 10,928 7,064 5,399 6,672 6,369 8,945 3,920 2,787 6,312 2,654 3,791 2,711 863 1,691 1,068
Foreign Assets 7,630 1,576 1,690 1,426 70 698 1,046 412 2,241 810 567 778 1,123 858 521 2
Liabilities
Deposits 102,281 74,554 88,884 31,491 43,538 43,827 71,118 26,132 18,994 34,346 20,462 21,707 23,913 6,281 11,237 8,703
Paid-up Capital 8,189 4,388 5,182 3,282 4,261 3,867 4,651 2,513 2,749 3,464 2,507 2,906 2,813 1,108 1,543 1,390
Total Capital 15,852 10,125 8,650 5,015 7,014 6,482 7,095 3,640 4,484 5,470 3,809 3,747 4,228 1,622 2,060 1,762
Income Statement
Interest Income 9,916 7,964 7,857 3,928 5,227 5,026 5,417 3,684 1,787 3,789 2,590 2,555 2,462 658 1,284 1,101
Interest Expense 3,307 2,960 2,695 1,466 2,027 2,123 2,029 1,549 743 1,398 898 1,002 807 359 864 521
Net Interest Income 6,608 5,004 5,162 2,462 3,200 2,904 3,389 2,135 1,043 2,390 1,691 1,553 1,655 299 420 580
Other Income 3,828 2,295 2,579 1,079 595 1,059 2,612 350 1,080 732 705 893 817 499 371 616
Expenses Incl provisions 5,609 4,873 5,689 3,348 2,172 2,525 4,304 2,071 826 1,997 1,458 2,109 1,319 429 502 933
o/w: Salaries and Benefits 3,485 2,145 3,228 1,502 1,238 1,179 1,618 753 386 1,243 751 873 695 229 267 382
o/w: Provisions 512 249 675 789 49 149 228 623 56 47 152 382 106 8 40 39
o/w: Admin and all other 1,612 2,479 1,786 1,057 884 1,197 2,459 695 384 707 556 854 519 191 195 511
o/w: Rent expenses 10 106 - - - - 250 - 1 67 - - - 74 56 -
Profit before tax 4,823 2,427 2,052 193 1,624 1,438 1,696 414 1,297 1,129 937 338 1,153 369 289 262
Tax 1,427 701 710 66 407 402 369 80 344 257 267 143 306 98 60 67
Profit after tax 3,396 1,726 1,342 127 1,217 1,036 1,327 335 953 872 671 195 847 271 230 195
Key YOY growth rates

Assets 44.1 38.7 82.5 3.9 27.6 25.8 54.9 1.3 36.0 23.2 37.5 26.1 48.5 36.7 31.0 48.8
Loans and Advances 52.9 44.7 105.0 12.0 33.8 30.3 61.0 0.0 43.9 27.4 57.9 36.3 71.1 30.2 39.5 85.2
Foreign Assets 83.5 1,058.2 148.9 93.2 (33.9) 21.5 - - - 21.4 281.7 143.2 324.7 370.7 (99.5)
NBE Bills -0.1 0.0 0.0 0.0 -2.7 0.0 -0.1 0.0 0.0 4.4 0.0 0.1 0.0 0.0 0.0 0.0
Deposits 44.9 39.4 86.6 4.6 29.4 26.0 56.3 0.0 31.7 23.9 47.5 30.7 48.5 35.5 34.0 64.5
Paidup capital 40.0 26.1 64.6 13.5 24.0 21.5 55.0 15.5 52.2 15.5 15.7 18.6 29.6 14.6 11.8 41.0
Total Capital 32.4 21.8 52.4 -1.8 21.2 21.1 38.8 4.6 43.6 18.9 24.0 9.4 36.9 19.6 14.5 25.0
Total Income 34.6 39.8 78.5 13.4 28.0 23.9 39.8 29.7 33.6 17.9 51.6 20.4 60.5 38.5 24.6 55.6
Total Expenses 34.9 41.2 75.5 44.2 29.6 22.6 46.6 55.4 36.9 22.7 48.1 45.5 51.6 40.6 25.4 100.4
Profit before tax 34.0 35.6 89.7 -82.1 24.0 27.4 19.2 -47.0 29.9 6.0 61.0 -52.3 80.1 34.5 20.8 -30.3
Per share data

Earnings per share (%) 47.0 47.1 39.1 4.2 30.8 28.9 40.0 14.4 46.9 27.0 29.3 7.4 33.4 25.0 15.8 16.6
Total Capital/Paid-up Capital 1.9 2.3 1.7 1.5 1.6 1.7 1.5 1.4 1.6 1.6 1.5 1.3 1.5 1.5 1.3 1.3
No. of:
Branches 566 454 608 398 381 383 469 276 61 316 285 261 286 91 88 111
Employees 12,188 10,492 8,146 4,957 7,382 4,706 5,174 2,852 998 4,259 2,491 5,283 5,307 789 800 2,027
Compensation costs
Wages & Salaries, Birr mn 3,485 2,145 3,228 1,502 1,238 1,179 1,618 753 386 1,243 751 873 695 229 267 382
Employees 12,188 10,492 8,146 4,957 7,382 4,706 5,174 2,852 998 4,259 2,491 5,283 5,307 789 800 2,027
Average monthly salary, Birr 23,830 17,037 33,022 25,247 13,975 20,885 26,054 21,999 32,263 24,312 25,138 13,764 10,920 24,231 27,862 15,711
Source: Cepheus Research compilaton based on Banks's Annual Reports
41
Banking Sector: Private Banks’ Overview—Individual Banks’ Performance in FY 2020-21, part 2
Figure 4.18B: Private Banks Overview: FY 2020-21
Balance Sheet Ratios (%) AIB DB BOA WB NIB UB CBO LIB ZB OIB Bunna Berhan Abay Addis Enat DGB
Loans/Assets 67 65 73 66 63 66 66 59 56 60 69 63 66 51 61 71
Loans/Deposits 84.1 82.7 84.9 82.7 78.6 81.1 75.4 73.0 73.9 72.6 87.7 78.6 83.1 71.5 79.8 95.3
Assets/Total Equity 812 935 1,201 791 773 835 1,146 885 561 762 681 718 710 547 710 660
Deposits/Liabilities 91 88 93 91 92 92 96 91 92 95 92 94 93 87 89 88
Capital Ratio (%)
Capital/Assets 12 11 8 13 13 12 9 11 18 13 15 14 14 18 14 15
Deposit Composition
Total Deposits 102,281 74,554 88,884 31,491 43,538 43,827 71,118 26,132 18,994 34,346 20,462 21,707 23,913 6,281 11,237 8,703
% Saving Deposits 61.8 60.3 65.5 61.1 67.2 51.4 59.9 80.1 51.5 51.3 75.7 61.7 75.5 50.8 45.1 49.6
% Checking Deposits 32.2 32.9 31.7 25.6 17.7 33.5 33.5 14.2 41.0 37.8 18.5 31.2 20.8 17.9 14.4 15.1
% Time Deposits 6.0 6.8 2.8 13.2 15.1 15.1 6.7 5.7 7.5 10.9 5.8 7.0 3.7 31.4 40.5 35.3
Revenue Composition (%)

Net Interest Income/Income 63.3 68.6 66.7 69.5 84.3 73.3 56.5 85.9 49.1 76.6 70.6 63.5 66.9 37.5 53.1 48.5
Non-interest-Income/Income 36.7 31.4 33.3 30.5 15.7 26.7 43.5 14.1 50.9 23.4 29.4 36.5 33.1 62.5 46.9 51.5
Cost Ratios (%)

Costs (exc int)/Income 40.8 47.5 54.5 66.9 37.3 41.5 53.6 51.3 28.8 44.2 44.3 61.2 40.2 37.1 30.3 54.3
Costs (exc int)/Avg Assets 5.1 6.0 7.1 8.6 4.5 5.2 6.4 6.5 3.8 5.3 6.5 8.7 5.3 5.6 3.9 9.6
Personnel Expenses/Total Exp 39.1 27.4 38.5 31.2 29.5 25.4 25.5 20.8 24.6 36.6 31.9 28.0 32.7 29.1 19.6 26.3
Rent Expenses/Total Exp 0.1 1.4 - 3.9 2.0 - 9.4 4.1 -
Provision Expenses/Total Exp 5.7 3.2 8.0 16.4 1.2 3.2 3.6 17.2 3.6 1.4 6.4 12.3 5.0 1.1 2.9 2.7
Effective Tax Rate 29.6 28.9 34.6 34.4 25.1 27.9 21.7 19.2 26.5 22.8 28.5 42.3 26.5 26.5 20.6 25.7
Margins
Effective Deposit Rate 3.8 4.6 3.9 4.8 5.3 5.4 3.5 6.5 4.5 4.5 5.2 5.2 4.0 6.6 8.8 7.5
Effective Lending Rate (incl Bills) 12.2 12.6 12.4 13.1 14.3 13.3 10.3 15.9 12.2 13.3 15.0 13.8 13.3 13.6 13.7 14.8
Spread 8.4 8.0 8.5 8.3 9.0 7.9 6.9 9.4 7.7 8.8 9.7 8.5 9.3 7.0 4.9 7.3
NIM 8.2 7.9 8.2 8.2 8.7 7.7 6.5 9.2 7.1 8.4 9.8 8.4 9.0 6.2 4.5 7.8
Profitability Ratios (%)

RoAA 3.1 2.1 1.7 0.3 2.5 2.1 2.0 1.0 4.4 2.3 3.0 0.8 3.4 3.5 1.8 2.0
RoAE 24.4 18.7 18.7 2.5 19.0 17.5 21.7 9.4 25.1 17.3 19.5 5.4 23.2 18.2 11.9 12.3
EPS 47.0 47.1 39.1 4.2 30.8 28.9 40.0 14.4 46.9 27.0 29.3 7.4 33.4 25.0 15.8 16.6
Efficiency Ratios
Branch productivity (Birr mns)
Deposit per branch 180.7 164.2 146.2 79.1 114.3 114.4 151.6 94.7 311.4 108.7 71.8 83.2 83.6 69.0 127.7 78.4
Revenue per branch 24.3 22.6 17.2 12.6 15.3 15.9 17.1 14.6 47.0 14.3 11.6 13.2 11.5 12.7 18.8 15.5
Profit per branch 6.0 3.8 2.2 0.3 3.2 2.7 2.8 1.2 15.6 2.8 2.4 0.7 3.0 3.0 2.6 1.8
Employee productivity (Birr '000s)
Revenue per employee 1,127.6 977.8 1,281.1 1,010.2 788.7 1,293.1 1,551.8 1,414.2 2,872.6 1,061.5 1,322.5 652.8 618.0 1,465.7 2,068.7 847.0
Profit per employee 278.6 164.5 164.7 25.6 164.8 220.1 256.5 117.3 954.6 204.7 269.2 36.9 159.6 343.8 287.1 96.2
42
Banking Sector: Commercial Bank of Ethiopia (CBE) Overview
Figure 4.18C: Commercial Bank of Ethiopia: Summary Financials, Birr mn unless otherwise stated
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Balance Sheet Balance Sheet Ratios (%)
Assets 244,128 305,075 384,693 490,068 573,894 712,882 819,279 991,319 Loans/Assets 80.9 85.6 84.2 79.3 81.8 80.0 80.0 83.9
Loans and Advances 197,399 261,172 323,746 388,495 469,261 570,455 655,219 831,663 Loans/Deposits 101.7 107.7 112.2 106.4 103.9 105.5 110.5 113.1
Corporate Bonds 92,400 128,100 158,549 197,616 247,844 313,493 368,317 - Assets/Total Equity 2202.6 2292.2 2388.6 1099.9 1215.7 1418.7 1642.4 1841.7
Foreign Assets 17,088 3,663 8,656 9,553 10,156 12,808 18,564 12,808 Deposits/Liabilities 83.3 83.1 78.3 82.0 85.8 81.6 77.1 78.4
Liabilities Capital Ratio (%)
Deposits 194,052 242,497 288,605 365,102 451,858 540,941 593,041 735,296 Capital/Assets 4.5 4.4 4.2 9.1 8.2 7.0 6.1 5.4
Paid-up Capital 8,082 8,082 8,082 40,000 40,000 40,000 40,000 40,000
Total Capital 11,084 13,310 16,105 44,554 47,206 50,249 49,882 53,827
Deposit Composition
Deposits 194,052 242,497 288,605 365,102 451,858 540,941 593,041 735,296
Income Statement % Saving Deposits 41.9 44.9 49.4 51.8 51.7 50.0 51.0 51.0
Interest Income 11,997 16,769 21,444 25,977 37,329 45,675 53,770 65,313 % Checking Deposits 53.1 49.6 46.4 44.6 45.0 45.6 46.5 46.5
Interest Expense 3,438 4,884 6,422 9,206 14,750 20,057 24,680 33,143 % Time Deposits 5.0 5.6 4.2 3.6 3.4 4.4 2.5 2.5
Net Interest Income 8,559 11,885 15,022 16,771 22,578 25,618 29,090 32,170
Other Income 5,800 6,444 6,239 6,263 5,482 8,120 14,822 16,642
Expenses Incl provisions 4,410 5,624 7,546 10,530 18,055 15,277 24,663 25,190 Revenue Composition (%)
o/w: Salaries and Benefits 2,578 3,337 4,418 4,637 7,779 9,673 16,748 … Net Interest Income/Income 59.6 64.8 70.7 72.8 80.5 75.9 66.2 65.9
o/w: Provisions 538 542 750 1,206 1,548 3,268 940 2,653 Non-interest-Income/Income 40.4 35.2 29.3 27.2 19.5 24.1 33.8 34.1
o/w: Admin and all other 1,294 1,745 2,378 4,687 8,728 2,336 6,975 5,790
o/w: Rent expenses 174 254 361 - - - - -
Profit before tax 9,949 12,704 13,715 12,504 10,006 15,700 14,957 19,278 Cost Ratios (%)
Tax 3,059 3,933 4,376 2,939 4,640 4,213 5,423 5,990 Costs (exc int)/Income 24.8 24.2 27.3 32.7 42.2 28.4 36.0 30.7
Profit after tax 6,890 8,770 9,339 9,565 5,366 11,487 9,534 13,287 Costs (exc int)/Avg Assets 1.8 1.8 2.0 2.1 3.1 2.1 3.0 2.5
Personnel Expenses/Total Exp 32.9 31.8 31.6 23.5 23.7 27.4 33.9 …
Rent Expenses/Total Exp 2.2 2.4 2.6 0.0 0.0 0.0 0.0 0.0
Key YOY growth rates (%) Provision Expenses/Total Exp 6.9 5.2 5.4 6.1 4.7 9.2 1.9 4.5
Assets 24.9 25.0 26.1 27.4 17.1 24.2 14.9 21.0 Effective Tax Rate 30.7 31.0 31.9 23.5 46.4 26.8 36.3 31.1
Loans and Advances 33.7 32.3 24.0 20.0 20.8 21.6 14.9 26.9
Foreign Assets (5.1) (78.6) 136.3 10.4 6.3 26.1 44.9 (31.0)
Corporate Bonds 141.9 138.6 123.8 124.6 125.4 126.5 117.5 - Margins (%)
Deposits 25.7 25.0 19.0 26.5 23.8 19.7 9.6 24.0 Effective Deposit Rate 2.0 2.2 2.4 2.8 3.6 4.0 4.4 5.0
Paidup capital - - (0.0) 394.9 - - - - Effective Lending Rate (incl Bills) 6.9 7.3 7.3 7.2 8.7 8.8 8.7 8.8
Total Capital 20.5 20.1 21.0 176.6 6.0 6.4 (0.7) 7.9 Spread 5.0 5.0 4.9 4.4 5.1 4.7 4.4 3.8
Total Income 29.6 30.4 19.3 16.5 32.8 25.7 27.5 19.5 NIM 4.9 5.1 5.1 4.7 5.2 4.9 4.7 4.3
Total Expenses 51.9 33.9 32.9 41.3 66.2 7.7 39.6 18.2
Profit before tax 16.2 27.7 8.0 (8.8) (20.0) 56.9 (4.7) 28.9
RoAA 3.4 3.2 2.7 2.2 1.0 2.2 1.8 1.9
Per share data (ETB) RoAE 67.9 71.9 63.5 31.5 11.7 29.2 27.6 34.0
Total Capital/Paid-up Capital 1.4 1.6 2.0 1.1 1.2 1.3 1.2 1.3
No. of: Efficiency Ratios

Branches 832 965 1,137 1,222 1,287 1,444 1,604 1,700 Branch productivity (Birr mns)
Employees 18,524 22,908 28,467 33,706 32,739 37,894 37,552 39,800 Deposit per branch 233.2 233.2 251.3 253.8 298.8 351.1 374.6 369.7
Revenue per branch 21.4 21.4 24.1 24.3 26.4 33.3 37.3 42.8
Compensation costs Profit per branch 8.3 8.3 9.1 8.2 7.8 4.2 8.0 5.9
Wages & Salaries, Birr mns 2,578 3,337 4,418 4,637 7,779 9,673 16,748 … Employee productivity (Birr '000s)
Employees 18,524 22,908 28,467 33,706 32,739 37,894 37,552 39,800 Revenue per employee 1.0 1.0 1.0 1.0 1.3 1.4 1.8 2.1
Average monthly salary, Birr 11,598 12,140 12,932 11,464 19,800 21,271 37,165 … Profit per employee 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
DATA IN USD TERMS:
Balance Sheet, USD mns 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Income Statement, USD mns 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Assets $ 12,470 $ 14,834 $ 17,646 $ 21,208 $ 21,051 $ 24,659 $ 23,457 $ 22,581 Interest Income $ 628 $ 833 $ 1,014 $ 1,156 $ 1,423 $ 1,742 $ 1,702 $ 1,659
Loans and Advances $ 10,083 $ 12,699 $ 14,850 $ 16,812 $ 17,213 $ 19,732 $ 18,760 $ 18,944 Interest Expense $ 180 $ 243 $ 304 $ 410 $ 562 $ 765 $ 781 $ 842
Corporate Bonds $ 4,720 $ 6,229 $ 7,273 $ 8,552 $ 9,091 $ 10,844 $ 10,546 $ - Net Interest Income $ 448 $ 590 $ 710 $ 746 $ 861 $ 977 $ 921 $ 817
Foreign Assets $ 873 $ 178 $ 397 $ 413 $ 373 $ 443 $ 532 $ 292 Other Income $ 303 $ 320 $ 295 $ 279 $ 209 $ 310 $ 469 $ 423
Liabilities Expenses Incl provisions $ 231 $ 279 $ 357 $ 469 $ 688 $ 582 $ 781 $ 640
Deposits $ 9,912 $ 11,791 $ 13,239 $ 15,800 $ 16,575 $ 18,711 $ 16,980 $ 16,749 Profit before tax $ 521 $ 166 $ 209 $ 206 $ 297 $ 369 $ 530 …
Paid-up Capital $ 413 $ 393 $ 371 $ 1,731 $ 1,467 $ 1,384 $ 1,145 $ 911 Tax $ 160 $ 27 $ 35 $ 54 $ 59 $ 125 $ 30 $ 67
Total Capital $ 566 $ 647 $ 739 $ 1,928 $ 1,732 $ 1,738 $ 1,428 $ 1,226 Profit after tax $ 360 $ 87 $ 112 $ 209 $ 333 $ 89 $ 221 $ 147
Exchange rate, end-period 19.6 20.6 21.8 23.1 27.3 28.9 34.9 43.9 Exchange rate, year-avg 19.1 20.1 21.2 22.5 26.2 28.1 31.6 39.4
Source: Commercial Bank of Ethiopia Annual Reports and Cepheus Research compilation
43
Banking Sector: Private Banks As A Group—Overview
Figure 4.19: Private Banks: Summary Financials, Birr mn unless otherwise stated
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Balance Sheet Balance Sheet Ratios (%)
Assets 155,097 190,510 259,716 348,597 447,000 560,555 773,546 Loans/Assets 47.3 48.3 49.4 50.0 54.1 59.6 63.9
Loans and Advances 74,595 91,386 132,579 178,801 251,483 343,333 507,205 Loans/Deposits 63.4 64.0 64.5 64.1 68.9 76.1 80.3
NBE Bills 36,276 41,739 53,568 71,262 89,951 81,017 81,089 Assets/Total Equity 674.3 686.5 741.3 750.4 739.9 729.1 795.4
Foreign Assets 6,419 8,871 10,999 10,959 11,104 11,635 21,447 Deposits/Liabilities 88.9 89.6 89.5 91.3 91.6 91.4 91.5
Liabilities Capital Ratio(%)
Deposits 117,946 146,547 201,839 278,532 359,629 448,898 627,469 Capital/Assets 15.6 15.5 14.4 14.1 14.2 14.3 13.1
Paid-up Capital 13,008 16,146 20,882 26,184 32,919 42,091 54,812
Total Capital 21,494 26,131 33,135 43,995 57,358 72,681 91,054
Deposit Composition
Deposits 117,946 146,547 201,839 278,532 359,629 448,898 627,469
Income Statement % Saving Deposits 56.4 56.2 56.9 57.9 59.8 60.8 60.5
Interest Income 9,300 12,241 16,369 25,871 35,603 48,701 65,244 % Checking Deposits 30.7 29.6 27.6 27.2 25.3 25.0 26.1
Interest Expense 3,589 4,729 6,392 10,344 14,620 19,173 24,749 % Time Deposits 12.8 14.1 15.6 14.9 14.9 14.1 13.3
Net Interest Income 5,711 7,512 9,977 15,527 20,983 29,528 40,495
Other Income 5,665 6,415 8,376 9,287 11,649 13,745 20,111
Expenses Incl provisions 5,943 7,858 10,994 14,440 18,568 26,201 40,165 Revenue Composition (%)
o/w: Salaries and Benefits 3,008 3,995 5,803 8,230 10,575 14,347 19,976 Net Interest Income/Income 47.6 51.5 50.8 57.9 59.7 64.5 64.6
o/w: Provisions 249 731 628 609 1,063 1,466 4,106 Non-interest-Income/Income 52.4 48.5 49.2 42.1 40.3 35.5 35.4
o/w: Admin and all other 2,686 3,250 4,564 5,602 6,930 10,387 16,084
o/w: Rent expenses 787 1,060 1,386 1,627 1,930 1,224 564
Profit before tax 5,433 5,808 7,605 10,483 13,999 17,073 20,440 Cost Ratios (%)
Tax 1,337 1,353 1,791 2,364 3,260 3,688 5,702 Costs (exc int)/Income 41.7 41.7 44.9 40.9 38.6 41.1 45.9
Profit after tax 4,094 4,456 5,739 8,119 10,739 13,385 14,738 Costs (exc int)/Avg Assets 4.7 4.9 5.2 4.9 4.8 5.3 6.1
Personnel Expenses/Total Exp 30.5 31.1 32.3 31.7 30.7 30.5 29.1
Rent Expenses/Total Exp 9.7 9.6 9.2 7.0 6.4 4.4
Key YOY growth rates Provision Expenses/Total Exp 3.2 5.8 3.5 2.7 3.1 2.7 5.9
Assets 35.8 30.2 40.5 35.8 30.6 26.9 35.4 Effective Tax Rate 24.0 21.7 22.7 22.7 22.1 20.8 27.5
Loans and Advances 55.8 35.0 43.4 38.2 41.1 40.5 45.7
Foreign Assets 153.7 64.4 111.4 21.6 123.6 136.8 160.9
NBE Bills 60.9 32.5 33.6 43.9 30.0 (10.8) 0.1 Margins
Deposits 40.4 31.1 42.3 39.0 30.9 26.9 37.7 Effective Deposit Rate 3.4 3.7 3.9 4.5 4.8 5.0 5.3
Paidup capital 23.6 27.3 32.9 29.8 25.3 27.7 28.7 Effective Lending Rate (incl Bills) 10.2 10.5 10.4 11.9 12.0 12.8 13.4
Total Capital 27.3 28.2 30.9 34.3 31.7 27.9 23.9 Spread 6.8 6.8 6.5 7.4 7.2 7.7 8.1
Total Income 41.7 37.0 34.0 44.9 36.5 32.8 36.9 NIM 6.3 6.5 6.2 6.9 6.8 7.5 7.9
Total Expenses 46.9 39.0 44.4 44.0 34.7 37.8 45.1
Profit before tax 36.3 33.8 60.5 49.7 38.3 24.7 15.7
RoAA 3.1 3.1 2.6 2.8 2.9 2.8 2.3
Per share data RoAE 19.7 20.3 17.8 20.2 20.4 20.1 16.6
Earnings per share (%) 30.8 29.5 28.4 31.2 33.7 33.2 28.3 EPS 30.8 29.5 28.4 31.2 33.7 33.2 28.3
Total Capital/Paid-up Capital 1.5 1.5 1.5 1.6 1.6 1.6 1.6
No. of: Efficiency Ratios

Branches 1,535 2,008 2,658 3,162 3,734 4,366 5,034 Branch productivity (Birr mns)
Employees 32,171 37,396 43,574 54,776 58,788 70,255 77,851 Deposit per branch 88.6 93.8 95.8 100.5 102.4 107.3 123.7
Revenue per branch 11.5 12.3 12.3 12.9 14.0 15.6 17.8
Compensation costs Profit per branch 3.2 3.2 3.0 3.0 3.4 3.6 3.4
Wages & Salaries, Birr mns 3,008 3,995 5,803 8,230 10,575 14,347 19,976 Employee productivity (Birr '000s)
Employees 32,171 37,396 43,574 54,776 58,788 70,255 77,851 Revenue per employee 548.9 608.4 677.1 787.5 937.6 1,041.0 1,272.1
Average monthly salary, Birr 7,792 8,902 11,098 12,521 14,991 17,018 21,382 Profit per employee 150.6 152.2 157.2 181.8 220.9 233.7 234.0
DATA IN USD TERMS:
Balance Sheet, USD mns 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Income Statement, USD mns 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Assets $ 7,541 $ 8,739 $ 11,239 $ 12,787 $ 15,462 $ 16,050 $ 17,620 Interest Income $ 462 $ 579 $ 729 $ 986 $ 1,266 $ 1,542 $ 1,657
Loans and Advances $ 3,627 $ 4,192 $ 5,737 $ 6,559 $ 8,699 $ 11,876 $ 11,553 Interest Expense $ 178 $ 224 $ 285 $ 394 $ 520 $ 607 $ 629
NBE Bills $ 1,764 $ 1,915 $ 2,318 $ 2,614 $ 3,111 $ 2,802 $ 1,847 Net Interest Income $ 284 $ 355 $ 444 $ 592 $ 746 $ 935 $ 1,028
Foreign Assets $ 312 $ 407 $ 476 $ 402 $ 384 $ 402 $ 489 Other Income $ 281 $ 303 $ 373 $ 354 $ 414 $ 435 $ 511
Liabilities Expenses Incl provisions $ 295 $ 371 $ 489 $ 551 $ 660 $ 829 $ 1,020
Deposits $ 5,735 $ 6,722 $ 8,735 $ 10,217 $ 12,440 $ 15,527 $ 14,293 Profit before tax $ 270 $ 275 $ 339 $ 400 $ 498 $ 454 $ 507
Paid-up Capital $ 633 $ 741 $ 904 $ 960 $ 1,139 $ 1,456 $ 1,249 Tax $ 66 $ 64 $ 80 $ 90 $ 116 $ 46 $ 104
Total Capital $ 1,045 $ 1,199 $ 1,434 $ 1,614 $ 1,984 $ 2,081 $ 2,074 Profit after tax $ 203 $ 211 $ 255 $ 310 $ 382 $ 329 $ 408
Exchange rate, end-period 20.6 21.8 23.1 27.3 28.9 34.9 43.9 Exchange rate, year-avg 20.1 21.2 22.5 26.2 28.1 31.6 39.4
44
Banking Sector: Current Year Trends and Outlook
• Latest banking sector data show deposit levels crossing Birr 1.48bn as of December 2021. Their growth rate is
nonetheless slowing, to just 9 percent in the first six months of the year (June to December 2021) and 22 percent
year-on-year as of December 2021. Lending was up 12 percent in the first half of this year and is now showing
year-on-year growth rates of just 23 percent after annual growth rates of 28-31 percent in recent years.
• Loan-to-deposit ratios at private banks have reached 87 percent, versus 81 percent in June 2021. An adjusted
loan-to-deposit for the sector (taking into account banks’ reserve requirements and need for precautionary cash
balances) is above 100% and points to very tight liquidity positions at most banks; in such a scenario where
available deposits are effectively fully deployed, gross new lending is largely dependent on the timing and
volume of repayments of previous loans.
Figure 4.20A: Banking Trends (Birr bns)
Y-o-Y
% Change
Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Dec 2020 Jun-21 Dec 21 Dec 2021
Bank deposits 367 437 568 729 899 1,043 1,213 1,363 1,481 22.1%
CBE 248 290 366 453 541 595 679 735 824 21.3%
Private Banks 118 147 202 276 358 447 534 627 657 23.1%
Bank loans outstanding 189 232 290 355 456 590 701 775 865 23.5%
CBE 115 141 157 177 197 243 265 268 293 10.9%
Private Banks 75 91 133 179 259 347 436 507 572 31.1%
Other indicators--all banks

Assets 460 575 745 914 1,165 1,379 1,575 1,765 1,951 23.9%
Paid-up capital 21 24 61 66 74 82 86 94.81 102.68 19.1%
Branches 2,500 3,145 3,888 4,442 5,164 5,965 6,326 6,734 7,361 16.4%
Source: Bank Annual Reports and Bank Survey Data
Figure 4.20B: Banks Deposit, and Loans Growth Rates
Banks Deposit, and Loans Growth Rates (%)

35%
31%
31%
30% 29%
28% 28%
25% 23% 23%

23% 22%
20%
16%
15%
10%
5%
0%
Jun 2018 Jun 2019 Jun 2020 Jun 2021 Dec 2021
Bank Deposit Growth (%) Bank Loan Growth (%)
Source: Bank Annual Reports and Bank Survey Data
45
Section 5: Exports and Imports
• Strong export growth has been an unexpectedly positive element of Ethiopia’s performance even in the face of COVID
and throughout the recent conflict. While part of the improved performance reflects exogenous factors (a sharp jump
in global coffee and gold prices), there were also encouraging volume increases for commodities such as gold, flowers,
fruits/vegetables, chat, and electricity. Overall, in fact, volume effects were more significant than price effects in
explaining the increase in last year’s export values.
• Imports have surged recently, rising by 24 percent year-on-year in the first five months of the fiscal year, after showing
minimal growth in 2020-21 and negative growth in each of the prior four fiscal years. This reflects not just higher
commodity prices but also volume increases in areas such as wheat and fertilizer imports. Higher imports point to
higher fx supplies becoming available, either through official bank channels, via franco valuta imports (based on
importers’ own fx sources), or via non-official routes.
Both exports and imports are growing strongly this fiscal year after six years of staying broadly unchanged at ~$3bn for
exports and four years of being flat at $14bn-$15bn for imports. The recent jump in their levels reflects a combination
of factors, but is predominantly due to the sharp rise in global commodity prices. Using trade data for both 2020-21 and
available trade data for the first five months of this fiscal year, the following trends are notable:
• Export mix: Ethiopia’s top six exports (with the exception of gold) continue to be made up of agricultural
commodities—namely coffee ($909mn, 25% of total), gold ($672mn, 19%), flowers ($471mn, 13%), chat
($403mn, 11%), oilseeds ($336mn, 9% of total), and pulses ($234mn, 7%). Price increases were more significant
for coffee and pulses, but volume increase were instrumental in most other cases (gold, chat, and flowers). In
fact, of last year’s $629mn export increase, we estimate $473mn or 75% was due to volume effects (primarily
reflecting a three-fold jump in gold export volumes) while the remaining 25 percent reflected price effects.
• Export destinations: The largest buyers of Ethiopia’s exports are Switzerland ($670mn, mainly gold) Netherlands
($294mn, mainly flowers), and the US ($276mn, mainly coffee and textiles); these three countries absorb 19%,
8%, and 8% respectively of total exports. Regional countries (Somalia, Saudi Arabia, UAE, Djibouti, and Sudan)
make up most of the remaining top 10 destinations. China, though once the no1 export market taking up $240mn
of exports, has now dropped to 14th place with just $68mn of purchases.
• Import mix: By product, the composition of imports is still dominated by fuel ($1.8bn, 13% of total), cereals
($1.3bn,9%,), fertilizers ($0.7bn, 5%), pharmaceutical products ($0.7bn, 5%), and chemicals ($0.5bn, 3%).
• Import origins: Imports continue to originate mainly from China ($3.2bn, 23% of total), India ($1.8bn, 12%), the
US ($1bn, 7%), the UAE ($0.9bn,7%), and Turkey ($0.8bn,5%).
Overall, although exports are substantially below potential and the recent improvement mainly reflects the role of
one dominant item (i.e., gold, which explains 75% of the export increase), the resulting improvement in Ethiopia’s
trade balance is nonetheless a very welcome development. At just 9.7 percent of GDP, the trade deficit is now half
of what it was—relative to GDP—as recently as five years ago. Thanks to this, the current account deficit—at just 2.9
percent of GDP—is also now at its lowest level in over a decade. This decline reduces the reliance on all external
(capital account) funding sources that generate future liabilities (i.e. FDI, foreign loans), and thus places Ethiopia in a
much stronger position with respect to external sustainability.
46
Export Performance: Trends in Recent Years, part 1
• While gold was the biggest contributor to export growth last year, coffee is taking on that role this fiscal
year. Gold made up 75% of the $629mn export increase last year, while coffee is—so far into the fiscal
year—making up about 85% of the $288mn five-month increase in exports.
• Just six export items—coffee, gold, flowers, chat, oilseeds, pulses—continue to make up about 82 percent
of overall exports, a ratio that is roughly unchanged from last year.
• Several of last year’s strong growers continue to post double-digit growth this fiscal year, including for
commodities such as chat (12%), flowers (18%), fruits and vegetables (56%), and meat (65%). Two
manufactured export categories (textile products and leather products) were 5.1 percent of total exports
last year and remain at essentially that ratio so far into this fiscal year (5.5 percent).
Figure5.1A: Ethiopia's Exports by Commodity
Value (USD mn), Value (USD

Major Commodities 2019-20 mn), 2020-21 % Share % change
1 Coffee 855.9 909.4 25.1 6.3%
2 Gold 196.5 672.0 18.6 242.0%
3 Flower 422.3 470.6 13.0 11.4%
4 Chat 324.4 402.5 11.1 24.1%
5 Oil Seeds 345.0 335.5 9.3 -2.7%
6 Pulses 234.8 233.8 6.5 -0.4%
7 Textile & Textile Prod. 168.9 147.1 4.1 -12.9%
8 Electricity 66.4 90.5 2.5 36.2%
9 Meat & Meat Prod. 67.4 75.3 2.1 11.7%
10 Fruits & Vegetables 58.8 69.3 1.9 17.7%
11 Live Animals 54.1 44.9 1.2 -17.0%
12 Leather and Leather Products 72.0 36.5 1.0 -49.4%
13 Electronics 37.9 23.6 0.7 -37.8%
14 Cereals and Flour 3.6 18.8 0.5 418.3%
15 Spices 13.9 15.7 0.4 12.9%
16 Natural Gum 5.2 3.5 0.1 -32.1%
17 Chemicals & Construction inputs 7.9 3.4 0.1 -56.4%
18 Bees Wax 2.1 1.8 0.0 -15.6%
19 Others 50.5 62.7 1.7 24.3%
TOTAL 2,987.7 3,617.0 100.0 21.1%
Source: NBE and Cepheus Research compilation
Figure 5.1B: Export Performance (mns USD)
FY 2020-21 FY 2021-22
Five month Five Month % Share % change
Coffee 275.25 516.5 32% 88%

Gold 306.01 241.6 15% -21%
Flower 173.38 205.3 13% 18%
Chat 157.35 176.5 11% 12%
Oil Seeds 105.62 113.5 7% 8%
Textile & Textile Products 65.26 74.9 5% 15%
Pulses 70.27 72.5 5% 3%
Meat & Meat Products 27.07 44.6 3% 65%
Elecricity 36.39 38.8 2% 7%
Fruts & Vegitables 23.25 36.2 2% 56%
Leather and Leather Products 14.82 14.4 1% -3%
Cereals and Flour 5.41 11.1 1% 105%
Spices 5.40 9.3 1% 73%
Live Animals 18.15 8.5 1% -53%
Electronics 12.61 7.6 0% -40%
Chemicals & Construction Inputs 1.69 1.8 0% 4%
Natural Gum 1.76 1.1 0% -39%
Bees Wax 0.74 0.1 0% -91%
Others 22.39 36.9 2% 65%
TOTAL 1,323 1,611
Source: MOTI, ERCA
47
• Looking at the sources of export growth between volume and price effects, last year’s export value
increase can be largely attributed to volume effects—though this only reflected on volume developments
for one commodity, namely gold.
• The increase in gold export volumes (nearly double from prior year levels) explained most of the gold value
increase, which in turn explained 75 percent of the overall export inflow increase.
• For this fiscal year, gold export volumes are seen to have declined 6 percent year-to-date, while coffee
volumes have increased sharply and been instrument in driving recent growth, alongside notable volume
increases for items such as flowers, chat, meat, and fruits and vegetables.
5.1C: Decomposition of Exports by Volume and Price Effects, FY 2020-21 5.1D: Decomposition of Exports by Volume and Price Effects, July-Nov 2021
Ranked by change in USD terms Ranked by change in USD terms
Change in Value Volume Price Change in Value Volume Price

USD terms Change, % Change, % Change, % USD terms Change, % Change, % Change, %
1 Gold 475.5 242.0% 187.7% 18.9% 1 Coffee 241.3 87.7% 63% 16%
2 Chat 78.0 24.1% 24.6% -0.5% 2 Flower 31.9 18.4% 19% 0%
3 Coffee 53.5 6.3% -8.3% 15.8% 3 Chat 19.1 12.2% 13% 0%
4 Flower 48.3 11.4% 7.6% 3.6% 4 Meat & Meat Products 17.5 64.7% 55% 6%
5 Elecricity 24.1 36.2% 43.0% -4.7% 5 Others 14.5 64.6% 64.6% …
6 Cereals and Flour 15.2 418.3% 438.4% -3.7% 6 Fruts & Vegitables 12.9 55.6% 47% 4%
7 Fruts & Vegitables 10.4 17.7% 16.0% 1.5% 7 Textile & Textile Products 9.7 14.8% 37% -14%
8 Meat & Meat Products 7.9 11.7% 14.1% -2.1% 8 Oil Seeds 7.9 7.5% -7% 14%
9 Spices 1.8 12.9% 2.6% 10.1% 9 Cereals and Flour 5.7 105.3% 86% 6%
10 Bees Wax (0.3) -15.6% -11.2% -4.9% 10 Spices 3.9 72.8% 2% 75%
11 Pulses (1.0) -0.4% -20.7% 25.6% 11 Elecricity 2.4 6.7% 4% 2%
12 Natural Gum (1.7) -32.1% -44.4% 22.1% 12 Pulses 2.3 3.2% -27% 43%
13 Chemicals & Construction Inputs (4.5) -56.4% -84.2% 175.2% 13 Chemicals & Construction Inputs 0.1 4.0% -54% 24%
14 Live Animals (9.2) -17.0% -10.7% -7.1% 14 Leather and Leather Products (0.5) -3.1% 13% -13%
15 Oil Seeds (9.5) -2.7% 3.8% -6.3% 15 Bees Wax (0.7) -90.8% -90% ….
16 Electronics (14.3) -37.8% 300.4% -84.5% 16 Natural Gum (0.7) -39.2% -45% 14%
17 Textile & Textile Products (21.8) -12.9% 5.5% -17.4% 17 Electronics (5.1) -40.1% -12% -59%
18 Leather and Leather Products (35.6) -49.4% -35.5% -21.5% 18 Live Animals (9.7) -53.3% -41% -20%
19 Others 12.3 24.3% … … 19 Gold (64.4) -21.1% -6% -16%
Source: MOTI, ERCA. Shaded areas are where volume effects were positive and dominant. Source: MOTI, ERCA
48
• A ten-year overview of export trends shows that last year’s strong growth finally reversed a nearly decade-
long slide in the share of exports to GDP.
• The exports-to-GDP ratio of 3.4 percent nonetheless remains very low in a global context. Had Ethiopia
just maintained its export share to GDP at its level of ten years ago (9% of GDP), last year’s exports would
have amounted to $10bn rather than $3.6bn.
Figure 5.2A: Exports to GDP ratio
Exports-to-GDP ratio (%)

10.0%
9.0%
9.0%
8.0% 7.5%
7.1%
7.0% 6.6%
5.9%
6.0%
5.0% 4.7%
3.9%
4.0% 3.6% 3.4% 3.4%
2.8% 2.8%
3.0%
2.0%
0
1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-2
-2
09
10
11
12
13
14
15
16
17
18
19
19
20
20
20
20
20
20
20
20
20
20
20
20
Figure 5.2B: Export Growth Rate
Export growth rates (%)

50%
40% 38% 37%
30%
21%
20%
16%
12%
10%
5%
1%
0%
-2%
0
-2%
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-2
-2
09
10
11
12
13
14
15
16
17
18
19
20
-5% -6%
20
20
20
20
20
20
20
20
20
20
20
20
-10% -8%
-20%
49
Export Performance: Exports by Destination
• Looking at export demand sources, Switzerland, the Netherlands, and the US, continue to dominate the
top three positions, with exports to Switzerland mainly comprised of gold, exports to Netherlands mainly
flowers, and exports to the US mainly coffee and textile products.
• Regional export markets make up 5 of the top 10—including Somalia, Saudi Arabia, UAE, Djibouti, and
Sudan. China has dropped significantly as an export destination, at 14th place and just $68mn in purchases
last year, despite it being the top market (absorbing $240mn of Ethiopia’s exports) as recently as 2017-18.
Figure 5.3: Exports by country--ranked by export level in FY 2020-21 (USD mn)

Export Destination 2017-18 2018-19 2019-20 2020-21 Level Chg % Chg % of Total
1 Switzerland 101.0 1.4 198.7 679.2 480.5 241.9% 18.8%
2 Netherlands 191.0 213.0 308.4 294.0 (14.4) -4.7% 8.1%
3 United States 254.0 283.2 212.5 276.0 63.6 29.9% 7.6%
4 Somalia 229.0 257.9 230.7 211.2 (19.5) -8.5% 5.8%
5 Saudi Arabia 189.0 183.2 207.0 209.0 2.0 1.0% 5.8%
6 UAE 111.0 137.5 124.4 164.6 40.1 32.3% 4.6%
7 Germany 181.0 126.5 160.8 133.5 (27.3) -17.0% 3.7%
8 Djibouti 125.0 132.2 118.4 94.6 (23.8) -20.1% 2.6%
9 Belgium 73.0 61.5 80.6 90.8 10.2 12.7% 2.5%
10 Sudan 103.0 68.3 68.2 85.2 17.1 25.1% 2.4%
11 India 63.0 89.6 56.4 74.8 18.4 32.7% 2.1%
12 Japan 90.0 122.1 113.3 73.6 (39.8) -35.1% 2.0%
13 S.Korea 46.9 64.0 68.4 4.4 6.9% 1.9%
14 China, Mainland 240.0 156.8 83.9 67.6 (16.3) -19.4% 1.9%
15 Israel 97.0 106.4 101.8 67.5 (34.3) -33.7% 1.9%
16 Singapore 14.0 22.9 38.8 50.5 11.8 30.4% 1.4%
17 Italy 57.0 57.1 44.2 47.7 3.5 7.9% 1.3%
18 United Kingdom 43.3 33.7 32.6 (1.1) -3.3% 0.9%
19 Indonesia 38.0 29.1 29.6 31.5 1.9 6.5% 0.9%
20 Yemen 55.5 38.4 31.2 (7.1) -18.6% 0.9%
21 France 32.0 20.5 28.3 28.5 0.1 0.5% 0.8%
22 Australia 2.0 20.6 15.0 23.0 8.1 53.8% 0.6%
23 Turkey 45.8 34.0 22.3 (11.7) -34.4% 0.6%
24 China, Taiwan 12.0 15.5 22.3 19.0 (3.3) -14.9% 0.5%
25 Hong Kong 17.0 13.6 12.1 17.7 5.6 46.0% 0.5%
26 Canada 18.0 16.8 14.5 17.0 2.5 17.4% 0.5%
27 Spain 14.0 19.7 15.0 15.6 0.6 3.9% 0.4%
28 Russia 18.0 12.5 11.9 13.5 1.6 13.9% 0.4%
29 Pakistan 16.0 6.9 11.9 10.3 (1.6) -13.3% 0.3%
30 Kenya 41.0 22.0 14.5 9.2 (5.4) -37.0% 0.3%
31 Norway 6.0 7.4 12.2 9.0 (3.2) -26.0% 0.2%
32 Kuwait 4.0 3.4 3.6 8.2 4.7 130.1% 0.2%
33 Malaysia 1.1 3.7 8.0 4.3 117.0% 0.2%
34 Sweden 10.0 6.1 5.7 6.8 1.1 18.5% 0.2%
35 Greece 11.0 7.8 4.0 6.7 2.8 69.7% 0.2%
36 South Africa 9.0 8.6 6.9 6.4 (0.5) -7.2% 0.2%
37 Nigeria 14.0 11.8 11.3 6.3 (5.0) -44.4% 0.2%
38 Egypt 10.0 26.4 5.2 5.0 (0.2) -3.7% 0.1%
39 Portugal 7.0 7.6 4.5 4.7 0.3 5.6% 0.1%
40 Zimbabwe 0.1 3.2 3.2 6233.2% 0.1%
41 All Others 443.0 197.8 437.6 593.0 155.5 35.5% 16.4%
TOTAL EXPORTS: 2,840.0 2,666.2 2,987.7 3,617.0 629.3 21.1% 100.0%
50
Import Performance: Trends in Recent Years
• Petroleum imports and cereal imports (mainly wheat) continue to dominate the top two shares of total
imports, each taking up more than $1bn of imports last year.
• Reflecting much higher global prices, both categories have already crossed $1bn in imports for the first five
months of this fiscal year and are on track to surpass $2bn for the full year at current trends.
Figure 5.4A: Value of Imports by Commodity: FY 2020-21 Figure 5.4B: Value of Imports by Commodity: July-Nov 2021
FY 2020-21 FY 2021-22
% Five month Five month % Share % Change
FY 2019-20 FY 2020-21 % Share Change Petroleum products 595 1,148 16% 93%
Industrial 3,636 3,440 24% -5%
Cereals 381 1,060 15% 178%
Petroleum products 2,004 1,839 13% -8%
Industrial 1,383 967 14% -30%
Cereals 843 1,337 9% 59%
Medical & Pharmaceuticals 213 349 5% 64%
Fertilizers 598 689 5% 15%
Chemicals 200 254 4% 27%
Medical & Pharmaceuticals 680 678 5% 0%
Transport 152 155 2% 2%
Chemicals 540 485 3% -10%
Textile Fabrics 228 146 2% -36%
Textile Fabrics 395 482 3% 22%
Transport 398 350 2% -12% Fertilizers 12 112 2% 800%
Raw materials 162 139 1% -14% Textile materials 56 73 1% 30%
Textile materials 111 137 1% 23% Raw materials 61 46 1% -25%
Agricultural 88 90 1% 1% Agricultural 57 27 0% -54%
Crude petroleum 0 0 0% 301% Crude petroleum 0 0 0% 3319%
Others 4,427 4,623 32% 4% Others 2,276 2,646 38% 16%
Total Imports 13,881 14,288 100% 2.9% Total Imports 5,616 6,983 100% 24%
Source: MOTI, ERCA Source: MOTI, ERCA
5.4C: Largest Contributors to Import Value Changes, FY 2020-21

5.4D: Largest Contributors to Import Value Changes, July-November 2021
Ranked by change in USD terms

Ranked by change in USD terms
Change in Value
Change in Value
USD terms Change, %
USD terms Change, %
1 Other non-durable consumer goods 696.6 110% 1 Cereals 678.7 178.0%
2 Cereals 493.5 59% 2 Fuel 552.7 89.1%
3 Food excluding cereals 303.9 56% 3 Medicines & Pharmaceuticals 136.4 64.0%
4 Fertilizers 90.9 15% 4 Fertilizers 99.9 799.9%
5 Textile fabrics 87.2 22% 5 Other non-durable consumer goods 49.7 38.1%
6 Textile materials 25.9 23% 6 Food excluding cereals 36.0 32.5%
7 Medicines & Pharmaceuticals (2.0) 0% 7 Textile materials 16.8 29.9%
8 Raw materials (23.2) -14% 8 Chemicals 10.9 27.2%
9 Chemicals (55.5) -10% 9 Other Semi-finished goods (1.6) -1.3%
10 Durable consumer goods (117.4) -13% 10 Raw materials (15.2) -24.7%
11 Fuel (147.2) -7% 11 Durable consumer goods (38.1) -11.2%
12 Capital goods (242.3) -6% 12 Textile fabrics (82.3) -36.1%
13 Other Semi-finished goods (491.0) -26% 13 Capital goods (443.2) -27.8%
14 Miscellaneous (212.8) -55% 14 Miscellaneous (13.1) -20.3%
TOTAL IMPORTS: 407 2.9% TOTAL IMPORTS: 1,367 24.3%
Source: MOTI, ERCA Source: MOTI, ERCA
51
Exports and Imports : Imports—A Ten Year Perspective
• Despite import increases last year and particularly at the start of this fiscal year, imports are shrinking
substantially relative to the size of the overall economy when seen over a decade-long time frame.
• The drops in imports relative to GDP are relatively broad-based, affecting fuel, consumer goods, and capital
goods. In terms of composition of imports, while capital goods were once a larger share of total imports
than consumer goods, this has now been reversed—with consumer goods taking up 38 percent of total
imports against a capital goods share of 27 percent.
Figure 5.5A: Imports by End-Use: A Ten Year View in Percent of GDP
In percent of GDP 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Total imports 27.1% 26.2% 24.1% 24.7% 25.5% 22.6% 19.4% 18.2% 15.7% 13.0% 12.8%
Raw Materials 0.6% 0.5% 0.3% 0.2% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1%
Semi-finished Goods 4.0% 4.6% 4.0% 3.2% 4.0% 3.9% 3.2% 3.0% 2.9% 2.9% 2.4%
Fuel 5.5% 5.0% 4.6% 3.5% 3.2% 1.8% 2.2% 2.8% 2.7% 2.0% 1.7%
Capital Goods 9.1% 7.0% 8.0% 7.2% 10.7% 9.2% 7.4% 6.3% 5.2% 3.9% 3.5%
Consumer Goods 7.5% 8.4% 6.7% 5.1% 7.0% 7.1% 6.0% 5.6% 4.4% 3.8% 4.9%
Figure 5.5B: Imports by End-Use: A Ten Year View--Percent of Total Imports
In percent of Imports 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Total imports 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Raw Materials 2.2% 1.8% 1.3% 0.9% 1.0% 0.9% 0.8% 0.9% 1.0% 1.2% 1.0%
Semi-finished Goods 14.9% 17.7% 16.6% 12.8% 15.7% 17.3% 16.6% 16.6% 18.4% 22.4% 18.8%
Fuel 20.1% 19.2% 19.0% 14.0% 12.4% 8.0% 11.3% 15.2% 17.2% 15.0% 13.6%
Capital Goods 33.4% 26.8% 33.4% 29.1% 41.8% 40.8% 38.2% 34.5% 33.3% 29.7% 27.2%
Consumer Goods 27.8% 31.9% 28.0% 20.7% 27.4% 31.5% 31.0% 30.9% 28.3% 28.9% 38.3%
52
Exports and Imports : Imports by Country of Origin
• China continues to be the leading origin for Ethiopia’s imports—as has been the case for the last 19 years.
Around 23 percent of imports ($3.3bn out of $14.3bn) are sourced from China and the share is even higher
if looking just at non-oil imports ($3.3bn out of $12.4bn or 27 percent).
• Besides China, three other countries from whom Ethiopia purchases close to a billion dollars of imports
include India ($1.8bn, 12% of total), the US ($0.96bn, 7%), and the UAE ($0.94bn,7%).
Figure 5.6: Imports by country--ranked by level in FY 2020-21 (USD mn)
Country of Origin 2017-18 2018-19 2019-20 2020-21 Level Chg % Chg % of total
1 China, Mainland 3,846.0 3,919.9 3,611.5 3,268.3 (343.2) -9.5% 22.9%
2 India 990.0 1,229.5 1,088.8 1,765.3 676.5 62.1% 12.4%
3 United States 1,197.0 1,369.7 1,071.0 960.6 (110.4) -10.3% 6.7%
4 UAE 533.0 550.2 546.7 940.6 393.9 72.0% 6.6%
5 Turkey 592.0 607.2 611.7 755.6 143.9 23.5% 5.3%
6 Malaysia 327.0 321.3 151.3 614.9 463.6 306.3% 4.3%
7 Morocco 289.0 313.8 425.3 585.6 160.3 37.7% 4.1%
8 Saudi Arabia 357.0 244.7 457.5 492.7 35.3 7.7% 3.4%
9 Kuwait 1,232.0 1,659.5 1,086.9 465.4 (621.5) -57.2% 3.3%
10 Ukraine 125.0 178.4 338.6 403.4 64.8 19.1% 2.8%
11 Italy 516.0 342.5 263.2 342.5 79.3 30.1% 2.4%
12 Indonesia 236.0 281.0 283.1 325.4 42.4 15.0% 2.3%
13 Egypt 294.0 224.2 292.3 284.3 (8.0) -2.8% 2.0%
14 United Kingdom 233.0 326.4 296.3 281.4 (14.8) -5.0% 2.0%
15 Germany 278.0 321.7 296.4 217.1 (79.3) -26.7% 1.5%
16 S.Korea 236.0 180.4 186.3 217.0 30.7 16.5% 1.5%
17 France 182.0 156.0 258.4 190.1 (68.3) -26.4% 1.3%
18 Belgium 114.0 342.5 241.5 190.0 (51.6) -21.4% 1.3%
19 South Africa 287.0 244.3 183.9 144.7 (39.2) -21.3% 1.0%
20 Singapore 17.0 41.7 197.0 142.5 (54.4) -27.6% 1.0%
21 Djibouti 9.4 38.3 139.2 100.9 263.4% 1.0%
22 Thailand 177.0 180.6 101.7 127.4 25.7 25.3% 0.9%
23 Russia 92.0 123.1 70.5 119.1 48.5 68.8% 0.8%
24 Rumania 91.0 131.4 51.6 110.2 58.6 113.7% 0.8%
25 Japan 518.0 374.9 180.2 106.5 (73.7) -40.9% 0.7%
26 Netherlands 231.0 183.8 155.0 97.6 (57.4) -37.0% 0.7%
27 Switzerland 56.0 63.3 72.6 74.6 2.0 2.8% 0.5%
28 Spain 87.0 75.8 81.0 64.2 (16.8) -20.8% 0.4%
29 Kenya 34.0 40.6 85.4 56.8 (28.6) -33.5% 0.4%
30 China, Taiwan 46.0 52.6 89.7 51.3 (38.4) -42.8% 0.4%
31 Poland 29.0 34.0 29.1 49.1 20.0 68.9% 0.3%
32 Canada 73.0 50.2 76.8 47.1 (29.7) -38.7% 0.3%
33 Brazil 140.0 70.1 16.9 44.7 27.7 163.8% 0.3%
34 Pakistan 120.0 49.9 31.3 43.6 12.3 39.2% 0.3%
35 Denmark 24.0 56.2 40.7 38.8 (1.9) -4.7% 0.3%
36 Ireland 29.0 46.4 38.9 33.1 (5.8) -14.9% 0.2%
37 Hong Kong 32.2 32.2 0.2%
38 Sudan 94.0 81.9 73.5 29.7 (43.8) -59.6% 0.2%
39 Ruwanda 25.4 25.4 0.2%
40 Bulgaria 23.2 23.2 0.2%
41 All Others 1,531.0 633.0 760.3 386.5 (373.7) -49.2% 2.7%
TOTAL 15,253.0 15,112.0 13,881.3 14,287.9 406.6 2.9% 100.0%
53
Section 6: Foreign exchange flows
• Gross fx inflows reached $21.5bn last fiscal year, a slight improvement from the preceding year but below the levels
seen two years ago. This figure reflects the sum of goods exports ($3.6bn), service exports ($4.9bn), remittances
($5.2bn), other private transfers ($1.2bn), official grants ($1.2bn), external borrowing ($1.4bn), and FDI ($3.9bn).
• On the outflows side, the biggest uses of foreign exchange are goods imports ($14.3bn), service imports ($4.3bn), and
repayments on foreign debt ($1.8bn).
• Reflecting the balance of all fx inflows and outflows over the course of the year, the net foreign assets of the banking
system rose modestly in 2020-21, suggesting a small surplus on the balance of payments. The fx balance increase seen
during FY 2020-21 reflected higher commercial bank fx balances, which rose by an amount sufficient to offset declines
in central bank foreign assets. Available data since July 2021 show a decline in the fx position of both NBE and
commercial banks (thus marking a BOP deficit) since the start of the fiscal year.
The limited availability of foreign exchange supplies remains of the main macroeconomic and business bottlenecks in
Ethiopia, and little progress has been recorded in this area in recent years. Gross fx inflows were close $22bn last year,
a 10 percent improvement from the prior year but essentially back to their levels seen two years ago. At the same time,
key fx outflows in the form of imports, service imports, and debt service have remained elevated allowing for very limited
net surpluses (and thus fx reserve accumulation) in recent years. Indeed, the reverse has been the case with the
drawdown of available reserves used to cover annual fx gaps: official fx reserves have fallen in two out of the last three
years, and in four of the past five years.
As is highlighted in the tables that follow, the following elements are notable from the most recent data on Ethiopia’s
fx inflows and outflows:
• Fx inflows—trends and composition: Contrary to the common perception, the biggest sources of fx inflows in
recent years have not been goods exports but rather items such as service exports, remittances, and FDI. For the
most recent fiscal year, 2020-21, fx inflows have been characterized by:
o A jump in exports and in the export contribution to total fx inflows (from 15 to 17 percent of total);
o A recovery in remittances flows, which are now $5.2bn per year and 24 percent of total fx inflows;
o Continued strong FDI inflows ($3.9bn), though this is largely due to the telecom license sale ($850mn)
effected in June 2021;
o A drop in external grants to just $1.2bn, from an annual average of $1.5bn over the prior five years;
o A drop in external loans to Government to just $1.2bn, from an annual average of $1.8bn over the prior
five years;
o A drop in external loans to the rest of the public sector (mainly state enterprises) to just $0.4bn, from an
annual average of $1.4bn over the prior five years—reflecting in part deliberate policy initiatives to limit
such borrowing;
• Fx outflows—trends and composition: On the outflow side, besides the large annual $14bn import bill faced in
recent years, the largest source of fx outflows reflect large repayments on the accumulated foreign debt. For 2020-
21, it is notable that debt service repayments of $1.8bn were effected (principal and interest), against new foreign
loans of just $1.4bn, implying a net negative transfer $0.4bn in loan-related financial flows from Ethiopia to the
rest of the world.
54
Foreign Exchange Inflows: A Long-Term View
• Gross foreign exchange inflows peaked at $22.4bn in 2018-19 and have generally stayed within the range of
$20bn-$22bn over the past five years. The largest contributors to fx inflows continue to be remittances ($5.1bn
annual average in recent years), services ($4.4bn annual average) and goods exports ($3.0bn annual average).
• Looking at composition shifts over the last six years, the biggest jumps are seen in service exports (up from 15%
to 23% of total inflows) and in loans to state enterprises, which are down from as much as 18% of total inflows
in 2014-15 to just 2% last year (the latter reflecting in part policy choices to limit new SOE borrowing).
Figure 6.1A: Composition of fx inflows--USD mns
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

Gross fx inflows: $ 20,437 $ 20,463 $ 19,946 $ 21,724 $ 22,345 $ 20,773 $ 21,480
Exports of goods $ 3,019 $ 2,868 $ 2,907 $ 2,840 $ 2,667 $ 2,988 $ 3,617
Exports of services $ 3,028 $ 3,196 $ 3,331 $ 4,220 $ 4,949 $ 4,702 $ 4,864
Interest earnings $ 13 $ (1) $ 30 $ 30 $ 31 $ 33 $ 30
Remittances $ 3,797 $ 4,420 $ 4,428 $ 5,121 $ 5,693 $ 5,124 $ 5,175
Other private transfers $ 1,085 $ 2,008 $ 1,058 $ 953 $ 682 $ 904 $ 1,184
Official transfers (grants) $ 1,508 $ 1,391 $ 1,428 $ 1,226 $ 2,087 $ 1,488 $ 1,227
Loan disburements to Government $ 2,219 $ 1,736 $ 1,537 $ 1,816 $ 1,544 $ 2,148 $ 1,021
Loan disbursements to Rest of Public sector $ 3,706 $ 1,763 $ 1,393 $ 1,689 $ 1,267 $ 953 $ 392
Foreign direct investment $ 2,202 $ 3,269 $ 4,171 $ 3,723 $ 3,015 $ 2,419 $ 3,970
Private sector capital flows (other) $ 384 $ 561 $ 633 $ 105 $ 410 $ 15 $ -
Source: NBE and Cepheus Research estimates for some of the FY 2020-21 items.
Figure 6.1B: Composition of fx inflows--In percent of total inflows
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

Percent of total inflows: 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Exports of goods 14.8% 14.0% 14.6% 13.1% 11.9% 14.4% 16.8%
Exports of services 14.8% 15.6% 16.7% 19.4% 22.1% 22.6% 22.6%
Interest earnings 0.1% 0.0% 0.2% 0.1% 0.1% 0.2% 0.1%
Remittances 18.6% 21.6% 22.2% 23.6% 25.5% 24.7% 24.1%
Other private transfers 5.3% 9.8% 5.3% 4.4% 3.1% 4.3% 5.5%
Official transfers (grants) 7.4% 6.8% 7.2% 5.6% 9.3% 7.2% 5.7%
Loan disburements to Government 10.9% 8.5% 7.7% 8.4% 6.9% 10.3% 4.8%
Loan disbursements to Rest of Public sector 18.1% 8.6% 7.0% 7.8% 5.7% 4.6% 1.8%
Foreign direct investment 10.8% 16.0% 20.9% 17.1% 13.5% 11.6% 18.5%
Private sector capital flows 1.9% 2.7% 3.2% 0.5% 1.8% 0.1% 0.0%
Source: NBE and Cepheus Research estimates for some of the FY 2020-21 items.
55
Foreign Exchange Inflows: A Long-Term View
• FX inflows have risen not kept up with growth in nominal GDP, which is up 3.5x in the past decade while
average fx inflows are only up 1.9x. Some fx inflows show level declines since a decade ago.
• FDI is the best performing fx inflow line-time in terms of its percentage increase over the past decade, rising
3.2x during this period or roughly in line with the increase in USD GDP.
Figure 6.1C: Ten years of Exports, Other FX flows, and USD GDP (in USD mns)
Private
Exports Services Remittance Grants FDI GDP
transfers
2010-11 2,747 2,586 2,032 715 1,861 1,243 30,406
2011-12 3,153 2,811 2,401 845 1,788 1,072 42,270
2012-13 3,116 2,853 2,489 1,086 1,530 1,232 47,557
2013-14 3,300 3,174 2,968 1,071 1,461 1,467 55,505
2014-15 3,019 3,028 3,797 1,085 1,508 2,202 64,476
2015-16 2,868 3,196 4,420 2,008 1,391 3,269 74,120
2016-17 2,908 3,331 4,428 1,058 1,428 4,171 81,567
2017-18 2,840 4,220 5,121 953 1,226 3,723 83,970
2018-19 2,663 5,190 5,693 110 1,200 3,100 96,107
2019-20 2,988 4,702 5,124 615 1,800 2,500 108,473
2020-21 3,617 4,864 5,175 1,184 1,227 3,970 106,470
Source: NBE and Cepheus Research estimates for certain 2020-21 items.
Figure 6.1D: Exports vs other FX inflows
Exports vs other FX Inflows

FY 2010-11 = 100
400
350
300
250
200
150
100
50
-
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
(50)
Exports Services Remittance Private transfers

Grants FDI GDP
Source: NBE and Cepheus Research compilation and estimates
56
Foreign Exchange Outflows: A Long-Term View
• On the outflow side, imports have made up on average around three-quarters (or ~$14bn-$15bn) of the
annual use of Ethiopia’s fx inflows.
• Looking at compositional shifts, debt service payments show the biggest jump over the past six years, rising
from just 4% to 9% of total use of fx funds, or up from $993mn to near $2bn in recent years.
Figure 6.2: Imports Vs Other Large Fx Outflows (USD mns)
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

Imports 16,459 16,725 15,803 15,253 15,112 13,881 14,288
Service Imports 3,107 3,442 3,393 3,983 5,098 5,013 4,271
Debt repayment 993 1,130 1,288 1,603 2,011 2,184 1,844
Figure 6.3A: Imports Vs Other Large Fx Outflows (USD mns)

Imports Service Imports Debt repayment
2014-15 $ 16,459 $ 3,107 $ 993
2015-16 $ 16,725 $ 3,442 $ 1,130
2016-17 $ 15,803 $ 3,393 $ 1,288
2017-18 $ 15,253 $ 3,983 $ 1,603
2018-19 $ 15,112 $ 5,098 $ 2,011
2019-20 $ 13,881 $ 5,013 $ 2,184
2020-21 $ 14,288 $ 4,271 $ 1,844
Figure 6.3B: Imports Vs Other Large Fx Outflows, Index 2014-15=100

Imports Service Imports Debt repayment
2014-15 100% 100% 100%
2015-16 102% 111% 114%
2016-17 96% 109% 130%
2017-18 93% 128% 161%
2018-19 92% 164% 202%
2019-20 84% 161% 220%
2020-21 87% 137% 186%
57
Foreign Exchange flows: A Schematic Overview of Inflows, Intermediaries, and Users
• The three main groups handle most of the fx intermediation in the market—NBE, CBE and private banks. Each
of these groups handles between $5bn to $8bn in fx inflows per year, with CBE and NBE likely at the higher end
of that range and the private banks collectively towards the lower end (with the largest among private banks
handling close to $900mn last year while mid-range banks handle $400mn per year).
• The three large fx pools are marked by relative different fx supplies: for NBE, inflows are mainly loans, grants
(excluding the surrender requirements from private banks); for CBE, they are mainly goods exports, service
exports, remittances, FDI inflows, and other private transfers; and for private banks they are mainly
remittances, other private transfers, goods exports, FDI inflows.
Figure 6.4: An Overview of Ethiopia's Foreign Exchange Market: FX Sources, Intermediators, and Users in FY 2020-21
FX sources FX uses
Intermediators
$22 bn $22 bn
Remittances
NBE [$5bn to $6bn,
$5,070mn
excl fx surrender requirements]
Imports:
$14,288mn
Services
$4,873mn
CBE [$6bn to $8bn]
FDI Service payments:

$3,971mn $4,279mn
Exports
$3,617mn
Private Banks [$6bn to $8bn] Debt repayments:
$1,844mn
Official Grants
$1,228mn
Official Reserves change:
Loans DBE [$1bn to $2bn]
-$340
$1,187mns
Other private transfers Others /Residuals

$1,184mn (including banks' reserves):
Others $1,930
$812
Informal/ Others
FX Market: Sources/Intermediators/ Users
Source: Cepheus classification based on NBE data and own estimates. 58

Foreign Exchange flows: Aid-related Flows vs Private Sector Flows
• A notable distinction can be drawn between ‘aid-related fx inflows’ and ‘private sector fx flows’. The former
would apply to inflows from official multilateral/bilateral agencies (grants and loans) as well as ‘other private
transfers’ (which include NGO-related inflows); the latter involve mostly private sector businesses/customers
and would include goods exports, services exports, remittances, and FDI.
• Focusing on FY 2020-21 versus the prior five year average, it is notable that ‘aid-related fx inflows’ have
dropped by 33 percent, while ‘private sector fx flows’ have risen by 16 percent. In USD terms the rise in private
sector flows (+$2.4bn) has offset the drop in ‘aid-related’ flows (-$1.9bn), thus explaining the small increase
seen in banking system fx reserves for FY 2020-21 and the relatively benign BOP picture last year.
Figure 6.5: Trends in Selected Foreign Assistance-Related Flows and FDI
2020-21 vs
Selected External Financial Flows 2015-16 2016-17 2017-18 2018-19 2019-20 Five-yr Avg 2020-21 5-yr avg
Aid-related flows $ 6,897 $ 5,417 $ 5,684 $ 5,580 $ 5,492 $ 5,814 $ 3,824 66%
Official Grants $ 1,391 $ 1,428 $ 1,226 $ 2,087 $ 1,488 $ 1,524 $ 1,227 80%
Private Transfers (excl remittances) $ 2,008 $ 1,058 $ 953 $ 682 $ 904 $ 1,121 $ 1,184 106%
Loans to Government $ 1,736 $ 1,537 $ 1,816 $ 1,544 $ 2,148 $ 1,756 $ 1,021 58%
Loans to State Enterprises $ 1,763 $ 1,393 $ 1,689 $ 1,267 $ 953 $ 1,413 $ 392 28%
Private sector flows $ 13,753 $ 14,837 $ 15,904 $ 16,324 $ 15,233 $ 15,210 $ 17,626 116%
Exports of goods $ 2,868 $ 2,907 $ 2,840 $ 2,667 $ 2,988 $ 2,854 $ 3,617 127%
Exports of services $ 3,196 $ 3,331 $ 4,220 $ 4,949 $ 4,702 $ 4,080 $ 4,864 119%
Remittances $ 4,420 $ 4,428 $ 5,121 $ 5,693 $ 5,124 $ 4,957 $ 5,175 104%
Foreign direct investment $ 3,269 $ 4,171 $ 3,723 $ 3,015 $ 2,419 $ 3,319 $ 3,970 120%
Source: NBE and IMF Balance of Payments data
59
Balance of Payments Presentation: The Last Five Years
• Presenting fx inflows and outflows in the more conventional balance of payments presentation shows a sharp
drop in the current account deficit last year, to 20-year low of less than 3 percent of GDP. This largely reflects a
sharp drop in imports relative to GDP, from 19% of GDP to just 13% of GDP last year.
• The change in banking system net foreign assets (NFA)—which is the basis for determining the overall BOP
position—has increased in three of the past five years, including by around $340mn for FY 2020-21. The 2020-
21 NFA increase has, however, coincided with a drop in NBE reserves (from $3.2bn in June 2020 to $2.9bn in
June 2021), which reflects the fact that the fx increase took place at the commercial banks.
Figure 6.6: Balance of Payments
2016-17 2017-18 2018-19 2019-20 2020-21
Balance of Payments Trends: USD billions

Current account balance (6,528) (5,253) (4,534) (3,969) (3,146)
Exports of goods 2,908 2,840 2,667 2,988 3,617
Exports of services 3,331 4,220 4,949 4,664 4,873
Imports of goods (15,803) (15,253) (15,112) (13,881) (14,288)
Imports of services (3,393) (3,983) (4,910) (4,245) (4,279)
Income account, net
Remittances 4,428 5,121 5,693 4,722 5,070
Private transfers 1,058 953 683 904 1,187
Foreign official grants 1,428 1,226 2,087 1,488 1,228
Current account balance (6,528) (5,253) (4,534) (3,969) (3,146)
Foreign direct investment 4,171 3,723 3,015 2,419 3,971
Foreign borrowing by GOVT, Net 1,402 1,632 1,158 1,947 896
Foreign borrowing by SOEs, Net 626 937 1,326 (234) (874)
Private and other flows 659 (201) 58 (730) 340
Current and Capital account balance 303 1,145 1,302 179 662
Errors and Omissions 356 (1,346) (1,244) (909) (322)
Overall External Balance 659 (201) 58 (730) 340
Change in Banking System NFA (+ is increase) (659) 201 (58) 730 (340)
Balance of Payments Trends: In Percent of GDP

Current account balance -8.0% -6.3% -4.7% -3.7% -2.9%
Exports of goods 3.6% 3.4% 2.8% 2.8% 3.3%
Exports of services 4.1% 5.0% 5.2% 4.4% 4.4%
Imports of goods -19.4% -18.2% -15.8% -13.0% -13.0%
Imports of services -4.2% -4.7% -5.1% -4.0% -3.9%
Income account, net

Remittances 5.4% 6.1% 5.9% 4.4% 4.6%
Private transfers 1.3% 1.1% 0.7% 0.8% 1.1%
Foreign official grants 1.8% 1.5% 2.2% 1.4% 1.1%
Current account balance -8.0% -6.3% -4.7% -3.7% -2.9%

Foreign direct investment 5.1% 4.4% 3.2% 2.3% 3.6%
Foreign borrowing by GOVT, Net 1.7% 1.9% 1.2% 1.8% 0.8%
Foreign borrowing by SOEs, Net 0.8% 1.1% 1.4% -0.2% -0.8%
Private and other flows 0.8% -0.2% 0.1% -0.7% 0.3%
Current and Capital account balance 0.4% 1.4% 1.4% 0.2% 0.6%
Errors and Omissions 0.4% -1.6% -1.3% -0.9% -0.3%
Overall External Balance 0.8% -0.2% 0.1% -0.7% 0.3%
Change in Banking System NFA (+ is increase) -0.8% 0.2% -0.1% 0.7% -0.3%
Memo items:
Official Foreign Reserves, (USD mn) 3,197 2,843 3,415 3,209 2,881
Official Foreign Reserves, months imports 2.4 2.2 2.7 2.8 2.4
Official Foreign Reserves, % GDP 3.9% 3.4% 3.6% 3.0% 2.6%
External Debt Stock (Public Sector, USD bn) 23.4 25.8 27.0 28.9 29.5
External Debt Stock (Public Sector, % GDP) 28.7% 30.8% 28.2% 27.0% 26.8%
Sources: NBE, MOF, CSA, and IMF; Cepheus Capital Research estimate for certain line-items in FY 2020-21.
60
Section 7: Exchange rate
• As a managed currency whose pace of depreciation is policy determined, movements in the Birr continued to reflect
central bank preferences for a gradual and controlled depreciation over the course of the year. By contrast, the
Birr’s parallel market rate was more volatile and moved in tandem with conflict-related sentiments and
developments.
• The nominal depreciation of 26 reflects policy preferences to limit the loss in competitiveness arising from high
inflation. Such an effort to prevent a loss of competitiveness was realized in 2019-20 (when the depreciation rate
exceeded the inflation rate), but this became less of a case in 2020-21 and especially more recently in the six months
to December 2021.
• Although now a clearly stated policy objective in the Ten Year Development Plan, the current absence of a market-
clearing exchange rate in Ethiopia continues to generate excess demand—and thus long waiting times—at
commercial banks.
Exchange rate developments
The Birr exchange rate vs the US dollar has moved from 39.4 Birr/USD at end-December 2020 to 49.3 Birr/USD at end-
December 2021, or a depreciation rate of 26 percent over the course of the year. The annual year-on-year changes in the
Birr rate were consistently between 25-26 percent during the past year, suggesting a desired/targeted percentage change
for the currency of that magnitude.
Figure 7.1A: Trends in Exchange Rate: Last 12 Months Figure 7.1B: Birr Depreciation Rate from year-ago levels (%)
Depreciation Rate from Year-Ago Levels
Trends in Exchange Rate: Last 12 Months 26.5%
30.00 25.9%
26.0% 25.9%
25.8% 25.7%
25.6% 25.6% 25.6%
25.4%
25.5%
35.00 25.1% 25.1%
25.0%
24.5%
40.00
39.44
39.97
24.0% 23.8%
41.32
41.94
43.03
45.00 43.69 23.5%
44.30
45.48 23.0%
46.10 23.0%
47.16
47.85
50.00 49.19 22.5%
22.0%
55.00
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 21.5%
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Source: CBE &NBE website Source: CBE, Cepheus Research
61
Exchange rate: Monthly movements and patterns
• The month-on-month change in the currency has average 83 cents this year, up from last year’s average of
61 cents per month. The annualized rate of change average 26% in 2021, vs just 20% in 2020.
• The Birr has exhibited a somewhat consistent pattern of monthly changes in 2021, swinging between
depreciation of 60-70 cents in one month, followed by a depreciation of 120-130 cents the following month.
Table 7.2A: Monthly Depreciation During 2021--In Birr

1.60
1.40 1.35 1.35
1.18
1.20
1.08
1.06
1.00
0.80
0.69
0.67
0.63 0.61 0.62
0.60 0.54
0.40
0.25
0.20
-
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Source: CBE Website and Cepheus Research
Figure 7.2B: Monthly Depreciation Over the Past Two Years--In Birr
Montlhy Depreciation in Cents

1.60
1.40
1.20
1.00 Average=
0.83
0.80
Average=
0.61 0.67
0.60
0.50
0.40
0.20
-
0
1
0
1
0
20
21
1
0
1
20
20
20
20
21
21
21
21
0
1
20
21
-2
-2
r-2
t-2
r-2
t-2
v-2
v-2
-2
-2
l-2
l-2
g-
c-
g-
c-
n-
n-
n-
n-
b-
p-
b-
p-
ay
ay
ar
ar
Ju
Ju
Oc
Oc
Ap
Ap
No
No
De
De
Au
Au
Ju
Ju
Ja
Ja
Fe
Se
Fe
Se
M
Monthly depreci ation in cents Average Jan-Dec 2020 Average Jan-Dec 2021
Source: CBE Website and Cepheus Research
62
Exchange rate: Recent Trends in a Cross-Country Context
• While most emerging market currencies depreciated during the course of 2021, the Birr has shown a rate of
depreciation (26 percent) that is among the higher end of this group. Most of Africa’s other large economies
showed single-digit depreciation rates, including Nigeria (-6%), South Africa (-8%), and Kenya (-4%).
• With inflation exceeding the Birr’s depreciation rate, the currency has shown a real appreciation of about 7
percent (simply taking inflation outturns less nominal deprecation). However, given rates of mid-single digit
inflation in most of Ethiopia’s trading partners, the REER appreciation is likely to be somewhat less.
Figure7.3A: Exchange Rate Changes, End Dec 2021 vs End-Dec 2020 Figure 7.3B: Exchange Rate Real Appreciation (2021 vs 2020)
Rate at Rate at Change in

Countries End-Dec 2020 End-Dec 2021 nominal rate Countries Real appreciation
1 Sudan 55.0 447.5 -713.6% 1 Angola 37.0%
2 South Sudan 177.1 424.5 -139.7% 2 Argentina 29.0%
3 Turkey 7.3 12.7 -72.2% 3 Nigeria 9.9%
4 Ethiopia 39.2 49.2 -25.6% 4 Ghana 8.3%
5 Argentina 84.0 102.6 -22.2% 5 Russia 7.9%
6 Colombia 3,472.0 4,009.0 -15.5% 6 Ethiopia 7.4%
7 Thailand 30.0 33.5 -11.5% 7 Egypt 5.9%
8 Japan 103.5 114.8 -10.9% 8 Israel 5.5%
9 Sweden 8.2 9.0 -10.5% 9 United Kingdom 4.8%
10 Poland 3.7 4.1 -9.3% 10 China 4.8%
11 Brazil 5.2 5.7 -9.1% 11 Canada 4.5%
12 South Korea 1,092.0 1,186.5 -8.7% 12 Mexico 4.2%
13 South Africa 14.7 15.9 -8.4% 13 Algeria 3.6%
14 Denmark 6.1 6.6 -8.1% 14 India 3.1%
15 Euro 0.8 0.9 -8.1% 15 Vietnam 3.1%
16 Philippines 48.0 51.0 -6.2% 16 Norway 2.7%
17 Nigeria 392.4 413.9 -5.5% 17 Kenya 2.0%
18 Australia 1.3 1.4 -5.1% 18 Singapore 1.8%
19 New Zealand 1.4 1.5 -5.0% 19 Brazil 1.7%
20 Algeria 131.7 138.3 -5.0% 20 Indonesia 0.8%
21 Ghana 5.8 6.1 -3.9% 21 Malaysia 0.0%
22 Kenya 108.9 113.0 -3.7% 22 New Zealand -0.1%
23 Switzerland 0.9 0.9 -3.6% 23 Morocco -1.0%
24 Morocco 8.9 9.2 -3.6% 24 Poland -1.5%
25 Malaysia 4.0 4.2 -3.3% 25 Philippines -2.0%
26 Mexico 20.0 20.6 -3.2% 26 Australia -2.1%
27 Norway 8.6 8.8 -2.4% 27 Switzerland -2.1%
28 Singapore 1.3 1.4 -2.0% 28 South Africa -2.9%
29 India 73.4 74.7 -1.8% 29 Euro -3.2%
30 Indonesia 14,110.0 14,254.0 -1.0% 30 Denmark -4.7%
31 Russia 73.6 74.0 -0.5% 31 South Korea -5.0%
32 United Kingdom 0.7 0.7 -0.3% 32 Sweden -7.2%
33 Canada 1.3 1.3 -0.2% 33 Thailand -8.8%
34 Egypt 15.7 15.7 0.3% 34 Colombia -10.2%
35 Vietnam 23,100.0 22,813.0 1.2% 35 Japan -10.3%
36 China 6.5 6.4 2.5% 36 Turkey -36.2%
37 Israel 3.2 3.1 3.1% 37 South Sudan -133.8%
38 Angola 650.3 585.0 10.0% 38 Sudan -374.0%
Source: CBE for Ethiopia, and US Treasury for other countries. Source: CBE for Ethiopia, and US Treasury for other countries.
63
Exchange rate and Inflation:
• Seen over an extended time frame, recent rates of both inflation and depreciation are at multi-year highs.
• Depreciation rates have tended to exceed inflation rates for most of the period between mid-2020 to mid-
2021, imply a real depreciation and enhanced competitiveness for that period. Since mid-2021, however,
this has reversed to past norms and depreciation rates have failed to match or exceed inflation rates.
7.4A Inflation and Depreciation rate
Inflation and Depreciation Rate

40%
35%
30%
25%
20%
15%
10%
5%
0%
Dec-18
Feb-19
Oct-19
Dec-19
Oct-20
Dec-20
Jun-19
Feb-20
Jun-20
Feb-21
Oct-21
Jun-21
Apr-19
Aug-19
Apr-20
Aug-20
Apr-21
Aug-21
Inflation(Y-0-Y) Deprectiation reate(%)
Source: CSA, NBE
7.4B: Inflation and Depreciation Rate(%)
Gap between Depreciation and Inflation (%)

10%
Real Depreciation
5%
0%
Feb-19
Jun-19
Jul-19
Sep-19
Nov-19
Feb-20
Jun-20
Jul-20
Sep-20
Nov-20
Feb-21
Jun-21
Jul-21
Sep-21
Nov-21
Dec-18
Jan-19
Apr-19
Aug-19
Oct-19
Dec-19
Oct-21
Dec-21
Mar-19
May-19
Jan-20
Apr-20
Aug-20
Oct-20
Dec-20
Mar-20
May-20
Jan-21
Apr-21
Aug-21
Mar-21
May-21
-5%
-10%
Real Appreciation
Real Appreciation
-15%
Depreciation and Inflation Gap
Source: CSA, NBE
64
Exchange rate: Measures of Overvaluation—REER and Parallel Market Premium
• The parallel market rate reached a high of around 70 Birr/USD during the months of July-September 2021,
with the corresponding gap with the official rate reaching peaks of near 45 percent. Reflecting subsequent
policy measures and policy/political developments, the gap between the official and parallel market rates
has since shrunk to around 30 percent, roughly at the average percentage gap seen over the past three years.
• The REER index has fallen in recent years, from a peak of 198.6 in June 2019 to 179.4 in June 2021, equivalent
to 14 percent improvement in the currency’s real competitiveness over the two-year period. We estimate
that the last six months (July-Dec 2021) will have shown a further 5% decline in the REER (given six-month
nominal depreciation of 12.6%, Ethiopian inflation of 12.5%, and estimated partner inflation of 3 percent).
Thus, despite the persistence of a parallel market premium, the pace of Birr depreciation over the past three
years has at least ensured there is no further loss of external competitiveness, after what was nearly a
decade of steady strengthening in the currency up to 2018. However, if current inflation trends are not
reversed, there is a potential for the REER to begin rising again and thus undermining competitiveness.
Figure 7.5A: Parallet Market Preium
Parallel Market Premium(%)

50%
45%
40%
35%
Average=30%
30%
25%
20%
Jul-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Jun-20
Jul-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Jun-21
Jul-21
Sep-21
Oct-21
Nov-21
Dec-21
Aug-19
Apr-20
Aug-20
Apr-21
Aug-21
Mar-20
May-20
Mar-21
May-21
Parall el Market Premium Average
Source: NBE, Cepheus Research
Table 7.5B: Real Effective Exchange Rate Index
Real Effective Exchange Rate, Index

220.0
198.6
200.0
179.4 179.4
180.0 173.8
Average 163.0 171.2
164.0
157.6 159.3
160.0
139.4 140.2 140.8

140.0
122.8
120.0
100.0
June June June June June June June June June June June Dec
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021
REER Average
65
Source: NBE for historical data. Cepheus Research estimates for FY 2020-21 and Dec 2021 REER values.
Section 8: Putting it all Together
• What overall conclusions can be reached in distilling Ethiopia’s recent macroeconomic record? First, even with efforts
to track a wide mix of indicators on the status of current conditions, there are clearly some unknowns and
uncertainties that may be limiting a full view of the macro picture; thus, the possibility of a more challenging macro
outlook than appears to be the case cannot be ruled out.
• Second, despite the uncertainties involved, it can reasonably be said that the macroeconomy has been resilient in
some respects and recent policy reforms appear to have helped in this regard. (This is, of course, not addressing the
immense humanitarian impacts, social disruptions, and loss in lives and livelihoods linked to the conflict). As was the
case with COVID, initial expectations (by some) of catastrophic macroeconomic consequences have not materialized;
instead certain sub-segments or sub-regions of the economy were heavily affected, but nationwide and macro impacts
turned out to be more moderate.
• Third, and irrespective of how one judges the recent record of macro performance, it appears—thanks to
developments as of early 2022—that macro policies are now clearly making tentative steps to move the economy
away from its war-time footing and towards a focus on recovery and reconstruction. A much more dedicated roll-out
and intensified implementation of the Ten Year Development Plan (TYDP) can thus now reasonably be expected for
the period ahead.
Unknowns and Uncertainties:
While available indicators seem to suggest a generally moderate macroeconomic impact, as argued in Section 1, it
must also be recognized that there are unknowns and uncertainties that may not be fully revealing parts of the macro
picture. Despite attempts to track a wide range of recent activity indicators, it is the case that: (1) the severity of impacts
in some critical areas is still yet to be fully documented; and (2) some aspects of economic performance may be poorly
recorded at this stage. Key areas of uncertainty and/or potentially incomplete data include:
• Extent of damage to the stock of social and physical infrastructure: In addition to the immense human and
social loss inflicted in conflict-affected regions (including losses in lives and livelihoods), stock losses to private
and public physical infrastructure (roads, factories, schools, hospitals) will have adverse consequences from a
macroeconomic perspective. Yet, in both areas, the extent of such losses are not yet effectively compiled to
date and may not yet be recognized for some time given the lack of communications and normal operations in
many areas. Recent reports from the Amhara Region have, for example, suggested damage to infrastructure
of the tens of billions of Birr due to damages to schools, health centres, hospitals and other public facilities. As
significant or possibly even higher amounts are possible/likely in the Tigray Region once such compilations and
communications reveal the approximate magnitudes.
• Stock losses versus flow losses: While GDP measurements capture the flow/change in goods and services
produced in a given year, the loss in pre-existing stocks of wealth (say roads, public facilities) may not
immediately show up in recorded measures of GDP. However, as the loss of these stocks of wealth reduces
what was routine economic activity related to their use, then declines in economic activity will gradually
become recognized over time. The impacts from stock losses may thus persist for some period of time.
• Crop losses: The degree of crops lost is also a major economic variable for which rough estimates are possible
but for which firm data are not available. A material level of crop losses is to be expected due to a combination
of farmlands not being planted in conflict areas, crops being destroyed once planted, insufficient labor being
66
available to harvest crops, or from post-harvest losses because of disrupted trade/transport lines. Early
estimates of crop losses and/or expected current crop harvest estimates from agencies such as the Ministry of
Agriculture may also be poorly recorded if reliant on weak, incomplete, or non-representative sample surveys
(this could be in either direction, i.e., via an understating or over-stating of the degree of crop losses due to
non-representative samples) . As crops are the single largest sector of the economy, the uncertainty on this
score can have major impacts for (this year’s) estimated GDP levels and growth rates.
• Second-round impacts: While immediate conflict impacts may be moderate or weakly captured, it is worth
noting that such impacts could build up over time if second-round impacts and confidence effects are
significant. Thus, for example, long-term tourist inflows can take significant time to recover if negative
perceptions (of the security environment) stay in place, and future FDI inflows could be held back by a sharp
drop in investor sentiment/confidence from the conflict last year. These effects may not show up immediately
in current figures (which reflect past investment decisions) but would become material if they persist and are
not subsequently offset (via say improved policies or active measures) in the period ahead.
• Potential new liabilities: War-time economies typically make use of off-budget expenditures or accumulate
emergency or contingent liabilities that are not formally recorded until well after the conflict subsides; this
does not appear to be the case based on available information, but if there were some resort to such
emergency measures, this implies potentially more challenging macro adjustments down the road.
• Trends in welfare indicators such as unemployment or poverty levels: Finally, as this report has not focused
on the humanitarian or social welfare dimensions of recent developments, it is worth underling that there can
of course be a major divergence between macro and social welfare trends. A positive macro picture may not
necessarily correspond with and does not necessarily imply, especially over short periods, similarly positive
trends in say reducing poverty or lowering unemployment. Within the conflict-affected regions, and as widely
reported, it is clear that a critical humanitarian situation still prevails and that, per UN reports, as much as 9
million people remain reliant on emergency food assistance and/or temporary shelters. Outside of the conflict-
affected areas, the full scale of social welfare impacts (in poverty and unemployment indicators for example)
is likely to emerge only slowly and is an area for which up-to-date remains limited.
Economic Resiliency:
While recognizing that the full extent of recent conflict impacts may not all be captured, it is also the case that there
has been (unexpectedly) strong performance in certain economic indicators and that nation-wide, macroeconomic
impacts have not necessarily been as severe as might have been expected. The scope of economic impact and damage
for affected regions and sectors cannot of course be minimized: perhaps 20 percent of the national population has
been in immediately conflict-affected areas and perhaps 15-25% of GDP sub-sectors has been exposed to direct conflict
impacts (a rough approximation taking most of Tigray region being impacted and sizeable parts of Amhara and Afar
regions as well). Directly recorded impacts on affected economic assets—crops, industry, schools, health facilities, and
infrastructure—is likely to be in the range of perhaps Birr 200-300 billion, judging by statements coming out from
regional officials. However, seen in the context of a Birr 5.7 trillion economy (the estimated GDP for FY 2021-22), these
damages would be on the order of around 5 to 10 percent of the aggregate size of the economy even if conflict related
losses range from say Birr 250bn at the low end to 500bn at the high end. To the extent that the rest of the economy
(the 90 to 95 percent) is broadly unaffected and, from here on, grows even modestly, then nation-wide GDP impacts
should be notably offset. In addition, to the extent that some areas of activity performed well or unexpectedly strongly
(as highlighted in Section 1), that would constitute a further offset of conflict related damages.
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The moderate macro impacts of the conflict is arguably partly due to some policy reforms initiated in 2018 and 2019.
In multiple areas, reforms enacted as part of the Home-Grown Economic Reform Program and related initiatives have
boosted activity in many sub-segments of the economy. For example, part of the export improvement reflects policy
reforms in the coffee marketing system that are allowing exporters to make direct sales and earn premium prices, thus
boosting volumes. Gold exports are up 10-fold (reaching $650mn last year) thanks to financial sector reforms put in
place by NBE on gold purchase prices. Targeted lending policies instituted following COVID have supported a wide range
of sectors—in tourism, construction, tourism—to improve their liquidity and operations through generous rescheduling
and extra financing. The strength of the banking system reflects in part generous rescheduling allowances enabled by
the central bank. The privatization program has supported FDI and overall fx levels by bringing in large fx inflows (even
if these are one-off items). Overall, better than expected performance has also been seen in areas such as FDI, mining,
industrial parks, revenue, deficit financing, banks’ performance, credit flows, exports, remittances and the current
account deficit (see Figure 8.1). Taken together, the better performance seen in these areas appears to have played a
role in off-setting the conflict’s concentrated impacts in the most affected regions.
Figure 8.1: Areas of Resilience Observed in the Ethiopian Economy, FY 2020-21 and FY 2021-22
General Area Sub-area Remarks

REAL SECTOR Crops Crop production and output in non-conflict areas of the country is reported by the Ministry of Agriculture to be very
positive, reflecting good rains, higher fertilizer use, cluster farming practices, and low-land irrigation initiatives
FDI Foreign investment inflows held up well, though this partly reflects one-off factors (e.g. telecom license sale)
Mining New/expanding mining sector projects are proceeding in many areas, following greater policy support and
improvements in this area
Industrial Park Exports Despite several industrial parks being directly affected by conflict, overall Industrial Park exports held up relatively
well. IP exports were roughly flat in FY 2020-21 but are up 20 percent in first five months of this fiscal year
Real Sector reforms Although delayed, many reforms in areas such as privatization, ease of doing business, financial sector, capital
markets, and public sector debt and governance remain under process and have not been reversed or discarded
FISCAL SECTOR Revenue Overall revenue has continued to grow, up near 20 percent in nominal terms, despite much reduced collections in
conflict-affected areas.
Budget Deficit The budget deficit is expanding, but by a much lower degree than might have been expected given policy
adjustments to prioritze/cut existing budgeted expenditures.
Treasury Bill Market Given the reliance of domestic funding, the T-Bill Market has functioned relatively well throughout the year to
enable the Government to meet its budget deficit financing needs. Funding from the T-Bill markets has gone up
from Birr 55bn at end-Dec 2020 to Birr 200bn at end-Dec 2021 (both based on outstanding T-Bills issued).
Funding costs Government funding costs are essentially unchanged whether for external debt or domestic debit. External debt
remains mostly at concessional rates, the sole external sovereign bond faces a fixed 6.65% coupon payment
(despite changing yields), and effective T-Bill rates have remained within the range of 8-10 percent.
Debt ratios Debt ratios have stayed roughly flat--at around 50 percent of GDP--thanks to growth in the nominal GDP
denominators
Repayments Government has met all its debt service obligations on its foreign debt, despite challenging fx conditions
MONETARY & Banks' performance The banking sector has--with few exceptions--managed the conflict impacts without severe threats to viability,
FINANCIAL SECTOR profitability, or capital base. Reflecting management reforms, public banks (CBE, DBE) both recorded significant
improvements in operations and record-high profits in the past year.
Credit flows Credit flows to Industry, Agriculture, and Construction sectors all expanded by 20% even during conflict period
EXTERNAL SECTOR Exports of goods Exports are growing by over 20 percent thanks largely to favorable global prices for products such as coffee/gold, as
well as volume expansions being recorded for gold, oilseeds, flowers, chat, fruits/vegetables, and electricity.
Exports of services Service exports, despite the tough global environment, increased by 4 percent to near $5bn in 2020-21.
Remittances Remittances reached a near-record of $5.1bn, up 7 percent from the prior year.
Exchange rate The Birr rate has depreciated by the same rate as it did pre-conflict (26 percent), reflecting the managed exchange
rate regime, and avoiding even more severe or volatile drops that might have been expected in a confict scenario
Current Account deficit The current account deficit has shrunk to its lowest level--relative to GDP--seen in over a decade, limiting the need
for seeking new external debt financing.
Source: Cepheus Research compilation
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Re-orienting towards recovery and reconstruction
With a notable de-escalation in Ethiopia’s civil conflict as of early 2022, clear signs are emerging that economy policy
will now gradually move away from its war-time footing towards a focus on recovery and reconstruction. As of
January 2022, the Government has presented an large reconstruction spending package (of Birr 5bn and Birr 122bn),
and thus explicitly signalled its intention to focus on post-conflict recovery and rehabilitation. Moreover, other recent
policy signals suggest an intention to make a re-invigorated push towards what is being heralded as an upcoming
national period of ‘reconstruction, re-building, and development.’
The upcoming moves to revive the economic reform and development agenda can be expected to be guided by the
Ten-Year Development Plan (TYDP) approved last year, although possibly with some modest modifications to account
for the recent conflict. Accordingly, the road-map for reform contained in the TYDP should be expected to form the
basis for upcoming policy initiatives that are to be launched and/or re-invigorated in the coming year. To highlight the
core elements of Ten-Year Development Plan, they include:
o Maintaining macro-financial stability: Recognizing the weak past record on inflation and debt, maintaining
monetary and fiscal policies that reduce inflation and control debt accumulation forms a key pillar of the TYDP.
To this end, the document targets improvements in revenue collection, better debt management, prudent
monetary policy, and (over time) a flexible exchange rate.
o Boosting Growth in Key Sectors: Seven key economic sectors are singled out for special support and expansion:
agriculture, manufacturing, construction, mining, trade, tourism and urban development. In addition four
infrastructure systems are accorded special attention for development: transport, water resources, energy,
and technology.
o Privatization: To limit public sector debt burdens and bring greater competition/efficiency to the economy,
privatization remains a continued priority and will cover a broad range of sectors.
o Financial Sector and Capital Markets: A gradual opening up of the financial sector (via new entrants, new
products, and new instruments) is envisaged to broaden financial inclusion and better address the financing
needs of a much wider range of economic participants. Moreover, the establishment of stock and bond
markets remains an explicit target for the coming years, with a substantial amount of preparatory work already
underway for the likely commencement of both these markets in 2023.
o Public Sector Reform: Given the large size of the public enterprise sector in the economy, including its role as
producer/employer and major source of past indebtedness, efforts to improve SOE operations remain a
priority under the TYDP. Initiatives in this area include improving oversign and governance systems and limiting
their ability to accumulate new domestic/external debt. The Government has set up a new vehicle, the Liability
and Asset Management Corporation, to address the large legacy of past SOE debt, while it is at the same time
setting up a public sector investment holding company (Ethiopia Investment Holdings) as another vehicle to
better manage existing SOEs, to leverage existing and under-utilized public assets, and to embark on catalytic
investments in under-served areas.
A summary of the key goals, priority reform areas, and strategic pillars of the Ten-Year Development Plan, whose
implementation can be expected to be actively implemented starting this year, is summarized in TABLE 8.2.
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Figure 8.2: TEN-YEAR DEVELOPMENT PLAN: Broad Themes, Objectives, Priority Reform Areas, and Strategic Pillars
Table 1: Six Development Objectives Table 2: Six Priority Reform Areas Table 3: Ten Strategic Pillars
1 A pragmatic market-based economy 1 Diversified growth & job creation 1 Quality Growth & Shared Prosperity
2 Macroeconomic stability 2 Financial Sector Development 2 Productivity & Competitiveness
3 Structural Economic Transformation 3 Harnessing the Demographic Dividend 3 Technological & Digital Economy
4 Inclusive development 4 Infrastructure Development 4 Sustainable Financing
5 Good governance and public services 5 Urban Development 5 Private Sector led Economic Growth
6 Strong & Inclusive institutions 6 Peace, Justice, & Inclusive Institutions 6 Resilient Green Economy
7 Institutional Transformation
8 Gender & Social Inclusion
9 Access to Justice & Civil Services
10 Regional Peace & Integration
Macroeconomic Framework--Key Targets
1 Growth: Targeted growth of 10 percent on average, reflecting annual averages of 13% for industry, 11% for services, and 6% for agriculture
2 Investment: Expected to rise to 37% of GDP, supported by higher domestic savings (31% of GDP) and external savings of 6% of GDP
3 Fiscal Stance: Targets to reach 14% of GDP in revenue, 17% of GDP of expenditure, and deficits on average of 3% of GDP
4 Non-Budgetary Financing: Target of X% of GDP on average, to be source from banking system, FDI, and new funding sources (e.g. capital markets)
5 Monetary Policy: Target of 21 annual average growth in money supply, and interest rates determined based on market forces
6 Exchange Rate Policy: Commitment to--over time--introduce an exchange rate that will solely be determined by supply and demand factors
Priorities Among Economic Sectors --Some selected and notable targets
1 Agriculture
Crop production to be raised 2.1x from 326mn quintals to 662mn quintals over ten years
Yields from irrigated farmlands to rise from 8mn to 38mn quintals
2 Manufacturing
Plans to raise capacity utilization (50% to 85%), domestic market share (30% to 60%), and jobs created to 5mn during ten years
3 Construction
Plans to satisfy 80% of basic construction input requirements from domestic sources
4 Mining
Plans to raise number of domestic investors by 21x and foreign investors by 4x
5 Trade
Target to boost exports from $3bn to $18bn, of which agriculture $6.7bn, manufacturing $9bn, mining $2.1bn
6 Tourism
Target to boost international tourism 9x over the ten years, domestic tourism 3x over the ten years.
7 Urban Development
Target to build 4.4mn housing units in urban areas and 600,000 around industrial parks
8 Transport
Target to increase road network by 102,000 kms, rail network up to 4,200 kns, achieve 23 truck terminals, 11 dry ports, 6 cold storage facilities
9 Water Resources
Target to raise large-scale irrigation to 2mn hectares, and coverage of irrigation from 2% to 20% of farmlands
10 Energy
Target to raise power generation capacity from 4,478MW to 19,900MW, and power lines from 18,400kms to 29,900 kms
11 Innovation and Technology
Target to raise mobile/internet services to 100% coverage; also 20 innovation/tech incubation centers, 3 national data centerss,
Source: Cepheus Research compilation based on MoPD "Ten Year Development Plan: A Pathway to Prosperity" document.
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Section 9: Macro Policy—Three Main Challenges and Choices
• Three key challenges and choices will be confronting macro policymakers in 2022. First, there is likely to be a major
tension between a tightening versus loosening of macro policies, especially in the fiscal and monetary arenas.
Addressing inflation and other imbalances calls for at least some tightening of policies while reconstruction needs will
require stepped-up spending and a relaxation of policies in certain areas.
• Second, given the clear need for substantially higher government financing for recovery and reconstruction, an
important issue is whether this will be sought from mainly domestic or external sources. In other words, will there be
a more independent (domestically-driven) recovery pursued or instead an internationally-supported one?
• Third, policymakers will need to find the right balance in the allocation of key economic resources—particularly credit
and foreign exchange—between the public versus private sectors. The allocation of loanable funds and forex supplies
tilted heavily towards the public sector last year (understandable in a war-time economy) but how much of this reverts
back to increased private sector allocations will have a major bearing on 2022 developments and on the business
operating environment this year.
Tightening versus Loosening:
As is often the norm in many war-time economies, the past year has been marked by macroeconomic loosening in
fiscal and monetary policies. To summarize the main areas where such policy loosening has been implemented:
• Credit to government has risen substantially. As of September 2021, net credit from the banking system was
up 94 percent year-on-year (from Birr 148bn to Birr 287bn, or an increase of 3 percent of GDP), while a broader
measure of funding to government—the change in its gross domestic debt from all sources—shows credit to
government up 55 percent in the year to September 2021 (from Birr 432bn to Birr 671bn).
• Budgetary spending has been expanded with two Supplementary Budgets of Birr 5bn and Birr 122bn enacted
in late 2021 to accommodate extra spending for conflict related recovery and reconstruction.
• Foreign exchange policies have been modified to allocate higher shares of fx inflows to the public sector, via
an increase in banks’ fx surrender requirement from 50 percent to 70 percent; correspondingly, the 40 percent
dollar previously retained by exporters has been reduced to 20 percent of their fx inflows.
• Pricing policies during most of 2021 were kept at subsidized levels for the public—despite their mounting fiscal
costs—in areas such as fuel, wheat, cooking oil, fertilizers, and utility/transportation rates (even though more
recent changes have begun to reduce such subsidies for products such as fuel.)
Difficult trade-offs are bound to be involved for policymakers if they are to address both substantial reconstruction
spending needs while at the same time not worsening inflation or debt sustainability conditions:
• Reconstruction will call for continued loosening in fiscal and monetary policy, essentially to help pay for
substantial post-conflict expenses in areas such as humanitarian relief supplies, assistance to displaced
persons, demobilization, and reconstruction of damaged physical assets. While private sector contributions,
donor support and other sources can be expected to meet part of these extra spending needs, a big share of
will be expected to be covered by government expenditure.
• Conversely, multiple signals indicate that tightening is in order to address unwelcome strains and
imbalances in the economy. High and rising inflation suggests some selected tightening of policies is in order,
while public sector liabilities that slowly accumulate as prices for key staples—fuel, wheat, oil, utilities—are
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kept unchanged also imply a need for tightening. Ethiopia’s debt position, although not posing a solvency risk,
is also facing debt service challenges and these can be aggravated if resources are shifted substantially from
repayments to reconstruction.
How precisely the Government will balance these tensions is a key unknown. It is possible that a balanced and
‘middle-of-the-road’ approach will be sought whereby some monetary tightening measures are put in effect (to address
still-high inflation) while retaining a somewhat looser bias with respect to budgetary policies. In addition, to limit the
burden on monetary policy, continued use of administrative measures (subsidies, price controls) may be given priority
instead of monetary tools. On fiscal policy, while some degree of resort to higher deficits (versus pre-conflict norms) is
to be expected, it is also likely that large reconstruction needs will be covered by cutting back on what were previously
planned capital expenditure items (thus at the expense of, say, foregone road/irrigation/health/education projects).
Thus one possible (and perhaps likely) approach is a combination of somewhat tighter monetary policy that is aided by
continued administrative measures in combination with a budgetary stance that is looser than pre-conflict norms.
External vs Domestic Financing:
Reconstruction will require substantial net new resources and where such funding will be sought—from domestic
or external sources—is another key macro challenge for the upcoming year. Such decisions will affect the size and
speed of resources that can be made available to fund reconstruction activities. Some key considerations here include:
• Size of reconstruction funding needs: While there may be large reconstruction demands (as well as
longstanding development needs) that will be identified in the coming year, in reality, it is likely the
available supply of such funds that will—in the end—determine the scope of resources that can be
devoted to reconstruction. Securing extra reconstruction-related financing amounts of say Birr 50bn,
100bn, 250bn, and 500bn would roughly amount to 1%, 2%, 5% and 10% of GDP—or equivalent to $1bn,
$2bn, $5bn, and $10bn in dollar terms. For perspective, the government’s annual budget this year is Birr
547bn (equivalent to ~10% of current year GDP), while recent budget deficits, which indicate the
government’s annual borrowing requirements, have averaged near 3 percent of GDP in recent years.
Moreover, to put in context the funding needs in fx terms, grants inflows have averaged $1.5bn in the
last five years (excluding FY 2020-21), external loans to government averaged $1.8bn per year, external
loans to SOEs average $1.4bn per year, FDI averaged $3.3bn per year, and the stock of official fx reserves
currently stands at around $2bn. Considering that any reconstruction funding should be seen as being
additional to already occurring spending and deficit financing norms, a realistic size of additional and
solely reconstruction-related funding that can be reasonably expected is perhaps on the order of 2-4
percent of GDP (thus say Birr 100bn to 200bn, or $2bn to $4bn) for the immediate period ahead.
• Domestic funding considerations: New credit creation was on the order of Birr 300bn last year, and this
is—after allowing for some moderate growth— indicative of the extent of new loanable funds that can
be created by the banking system in the immediate period ahead. However, most of this is absorbed by
loans going to government (to cover the budget deficit), to state enterprises, and to the private sector.
Some non-bank domestic funding is already forthcoming and may continue in the year ahead, but
amounts are unlikely to be large from a macro perspective; this includes grants or in-kind contributions
from private entities, or exceptional transfers by non Federal Government bodies such as municipalities
or other public entities.
• External funding considerations: Three main external funding sources that can be considered as largely
directed towards assistance—official grants, loans to government, and private foreign transfers (e.g
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primarily NGO-type flows)—provided an annual average of about $4.4bn in funds per year prior to FY
2020-21.1 This figure dropped to $3.4bn in FY 2020-21 but the trend lines for this fiscal year—up to
December 2020—are pointing to the likelihood of even lower annualized levels of closer to $2.5bn-$3bn.
Thus, just reverting back to the ‘normal’ assistance levels prior to 2020-21 would imply an additional $1bn
to $2bn in external funding. The extent to which any such additionality and ‘ramp up’ can take place will
be dependent on the speed and depth of Ethiopia’s re-engagement with its external partners—including
getting the right mix between bilaterals and multilaterals, donors vs lenders, official vs private funders,
and traditional (‘Western’) vs non-traditional (Asian and Middle Eastern) partners.
As is revealed by the above, the policy decisions on whether to rely on a largely domestic, largely external, or
combined approach to reconstruction will determine the likely size and speed of near-term funding supplies.
Excessive reliance on a domestically driven funding approach can use up most newly created domestic deposits/credits,
thus leaving the local private sector squeezed out of financing and growth opportunities. At the same time, making
greater use of external resources requires a much more active engagement with the relevant partners. All things
considered, a balanced and pragmatic approach that moderates government’s use of domestic credit (to avoid private
sector crowding out) while at the same time boosting the pool of external resources (via at least a partial return towards
previous funding norms) does appear preferable and more clearly to the benefit of all stakeholders involved.
Resource Allocations to Public vs Private Sectors—Credit and FX:
The allocation of two vital resources—credit and foreign exchange—has not only tilted heavily towards the
public sector in the past year (given its budgetary financing and forex needs) but also shows signs of continuing
to do so for the coming year. As highlighted earlier, as of September 2021, credit to Government rose 94 percent
year-on-year vs just 17 percent year-on-year for the private sector. Seen differently, of the total credit creation in
the year to September 2021, 43 percent flowed to the Government, 32 percent to SOEs, and 26 percent to the
private sector. With respect to access to foreign exchange resources, a recent central bank directive increased the
share of commercial banks’ fx inflows that are surrendered to the NBE (public sector) from an already high 50
percent to 70 percent as of January 2022. In short, unless current conditions change, the share of new credit and
new fx flows going to the private sector would remain in the range of just 26 to 30 percent respectively.
While the early signs at the start of 2022 regarding private sector credit/fx access are thus not encouraging, it
is the case that the recent normalization of the political space may bring a reversal of these trends and NBE fx
policies may change (yet again) to reflect evolving/improving conditions. It is also notable that the share of these
two resources that can be expected by the private sector will itself be a function of broader choices taken on the
stance of macro policy (tightening vs loosening) and on the relative use of financing sources (domestic vs external).
To the extent that a moderate stance is adopted on policy tightening combined with greater efforts to capture
foreign financing flows, this would help improve credit and fx flows to the private sector even under current
conditions.
1This reflects the sum of five year average inflows (FY 2015-16 to FY 2019-20) from $1.8bn for loans to government, $1.5bn for official
grants, and $1.1bn from ‘other private transfers’ (e.g NGO and related inflows).
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Section 10: Our Baseline Macro Projections and an alternative scenario
• Our baseline macro outlook takes the view that a growth slowdown is unavoidable this fiscal year (given developments
in the last six-month period) but that a strong growth bounce back is almost inevitable next year, conditional on the
assumption of a conflict de-escalation and return to normalcy across most sub-sectors.
• Although an improvement in the political/policy landscape over the remaining six months of this fiscal year can be
expected to partly reverse some of the adverse trends of the most recent six months, we expect any such changes will
be gradual and that full-year outturns for 2021-22 will thus end up showing slower growth, higher inflation, a higher
deficit, and a weaker external position compared to 2020-21.
• In an alternate scenario involving a prolonged ‘stalemate’ or ‘low-level conflict’ scenario, it is to be expected that—
besides what will likely be lower/negative growth as well as continued high inflation—conditions for the private sector
would be further aggravated by continued tightened access to credit and fx . Further strains are thus to be expected—
in this adverse scenario—on firms’ operational expansion, long-term growth, and job creation prospects.
Underlying assumptions
Our baseline macroeconomic projections assume—based on the direction of political and policy developments as of
early 2022—that there is a continued de-escalation in the conflict, such that major active hostilities are no longer in
place for the year ahead. Moreover, given recent initiatives, it is assumed that policies will soon begin to meaningfully
address large humanitarian needs in all affected regions and that there is a gradual restoration of infrastructure links,
commerce, and economic activity in what were conflict-affected zones. This assumed baseline is clearly a
‘reconstruction scenario with no conflict’ and takes the (optimistic) assumption that there will be no reversals or
backsliding on the political/conflict front. For illustrative purposes, an alternate scenario involving a prolonged low-
level conflict scenario (and where normalcy fails to return in farm activities, in infrastructure links, and in commerce) is
also sketched out at the end of this Section, to highlight some of the implied macro impacts under that adverse case.
Regarding the three policy tensions highlighted earlier (Section 9), we make the following judgements and
assumptions on the likely direction of near-term policies. In particular, we assume policymakers will: (1) adopt a
‘middle-ground’ position between tightening and loosening, with the remainder of the year marked by continued fiscal
loosening alongside somewhat tighter monetary policy focused on inflation control; (2) aim to secure a gradual increase
in external financing flows, even if the volume of such flows does not immediately revert to past norms; and (3)
continue to allocate substantial fx resources to the public sector (thus maintaining the current 70% fx surrender
requirement in the near-term) but enable a somewhat higher proportion of credit flows to go to the private sector as
this will be increasingly possible with greater external financing becoming available to cover the wider budget deficits.
Growth and economic activity
For the current fiscal year ending in June 2022, we expect a deterioration in growth outturns in line with the
observations of high frequency indicators for the most recent (July-December 2021) six month period. Most notably,
we expect drops to be registered in crop production levels as well as lower growth rates to be recorded in areas such
as construction, manufacturing, and some services. Our sector-specific views on prospects for the current fiscal year
(2021-22) and for the upcoming fiscal year (2022-23) are summarized below:
• Crops: As the largest component of GDP, trends in crop output will dominate all other sectors and have the
strongest bearing on the growth outlook. For this fiscal year, key considerations are: (1) the degree of damage
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to crop output in Tigray, Amhara, and Afar; and (2) the extent to which crop outturns in the ‘rest of the country’
have performed to offset losses in northern Ethiopia (including, for example, on account of recent low-land
irrigation initiatives). Based on a mix of regional government statements on crop losses, Ministry of Agriculture
indications, and a review of the distribution of farmland by zones in Tigray and Amhara (see Figure 10.1), we
think it is reasonable to expect crop losses of as much as 50 percent of previous year outturns in Tigray and as
much as 20 percent losses in Amhara. Given their production levels in the year before the conflict, this implies
crop output drops from 20.3mn to 10.1mn in Tigray and from 111mn quintals to 88mn quintals in Amhara. For
the ‘rest of the country’, we assume this will follow recent trend growth of 5 percent, reflecting very favorable
rains—per meteorology data—throughout the June-September 2021 rainy season and various on-going farm-
related initiatives (expanded irrigation, expanded fertilizer use, expanded cluster farming, and expanded use of
modern machinery). Reflecting the above, we estimate the total crop output would show a drop of 6 percent
this year, from last year’s 342mn quintals to around 320mn quintals, or roughly close to levels of two years ago.
Figure 10.1: Crop Outputs in Conflict-Affected Areas and Implications for Current Year GDP Growth Forecasts
National Crop Production, ACTUAL 2020-21, Mns quintals: 341.8 100%

Amhara 110.9 32%
Tigray 20.3 6%
Rest of country 210.6 62%
Estimates of Output Changes for FY 2021-22 % Change

Amhara -20%
Tigray -50%
Rest of country 5%
Change vs 2020-21
National Crop Production, FORECAST, 2021-22, Mns of quintals 320.0 -6.4%
Amhara 88.7 -20.0%
Tigray 10.2 -50.0%
Rest of country 221.1 5.0%
GDP
Total GDP growth implied: 1.0% Weights
Agriculture -6.4% 32.5%
Industry 4.0% 29.3%
Services 5.0% 38.2%
Memo items:
Crop Output Figures in Amhara and Tigray Prior to Conflict
Amhara Region--Mns of quintals 110.9 100% Tigray Region--Mns of quintals 20.3 100%
1 West Gojam 19.9 18% 1 NW Tigray 5.7 28%
2 East Gojam 18.8 17% 2 Central Tigray 4.0 20%
3 North Shewa 13.7 12% 3 Western Tigray 3.9 19%
4 South Gonder 12.8 12% 4 Southern Tigray 2.5 12%
5 Central Gonder Zone 12.2 11% 5 All other areas 2.3 11%
6 South Wollo 9.6 9% 6 Eastern Tigray 1.8 9%
7 Awi 8.0 7% 7 SE Tigray 0.0 0%
8 North Wollo 5.2 5%
9 West Gonder Zone 4.4 4%
10 North Gonder 3.3 3%
11 Waghemra 1.7 2%
12 Oromia Speical Zone 1.2 1%
Source: Cepheus Research compilation based on CSA crop output statistics. FY 2021-22 data reflect assumptions for crop losses in two regions and projections for other sectors
75
• Construction: The second largest GDP sector shows signs of a slowdown in activity as gleaned from cement
production, credit, and anecdotal data. Last year’s GDP data already showed much reduced growth in this sector,
with output expanding at its slowest pace in ten years, from the 15-20 percent annual growth that was the norm
a few years ago to just 6.6 percent in 2020-21. Credit to the sector rose by 22 percent as of June 2021, but this
marks its lowest level in several years and is close to zero in real terms. More recently, during the July-December
2021 period, the credit freeze imposed by NBE will have significantly affected new and on-going projects. Even
allowing for some pick-up in activity in the January-June 2022 period, we would thus anticipate either flat or
very marginal growth this fiscal year for the construction sector (the dominant part of the industry share of GDP).
• Services: While some services activities have continued to show weakness versus pre-covid and pre-conflict
norms, especially in tourism and hospitality sector, there are also notables areas of strength in airline services,
banking, health and education. Some sub-segments of the economy also show growth simply because there is a
modest recovery taking place from what were unusually low post-covid/post-conflict levels (e.g. monthly tourist
inflows fell from a peak of 80,000 per month in mid-2019 to just 3,000 visitors in mid-2020, but are now back to
near 30,000 per month, thus still well below previous highs but strong growth versus year-ago levels). We also
expect that the public administration sub-component of services would register strong growth. Mid-single digit
growth in this sector thus appears plausible, perhaps just slightly below last year’s 6.3 percent services growth.
• Manufacturing: Though a very small share of the economy at less than 5 percent of total GDP, large scale
manufacturing trends have shown growth in recent years at increasingly lower rates. Growth in this sub-sector
was only 5.1 percent last year, down from growth rates of 8 percent in the two prior years, and 25 percent five
years ago. Fx constraints, ease of doing business challenges, logistics disruptions/bottlenecks, and more recently
the conflict are all likely to have contributed to the slowdown in growth. For this fiscal year, while industrial park
activity (a sub-set of manufacturing) is growing strongly as of November 2021 (exports up 20 percent year-on-
year in dollar terms) we don’t expect that overall manufacturing growth would exceed last year’s and thus
project it would likely be in the range of only 3-5 percent. This view is reinforced by indications from many
companies producing fast-moving consumer goods, who are seeing drops in consumer demand from northern
regions affected by conflict and thus likely to experience limited or no growth this fiscal year.
• Mining: Although the fastest growing GDP sub-sector last year, with real growth of 115 percent, the tiny weight
of this sub-sector (at just 0.5 percent of GDP) implies that there will not be a material impact on overall GDP
figures, even with continued strong growth continuing into this year.
All things considered, we project that GDP growth will be around just 1 percent for this fiscal year, but that there
should be a strong bounce back in growth to near 7 percent in 2022-23. This year’s 1 percent projected growth reflects
anticipated growth rates of -6 percent for agriculture, 4 percent for industry, and 5 percent for services, as well as their
respective weights of 33%, 29%, and 38% in real GDP. For the upcoming 2022-23 fiscal year, the projection reflects
expectations of crop output being restored in previous conflict zones, re-building works boosting construction activity,
and higher external financing flows becoming realized alongside the on-going de-escalation in the conflict. With regular
planting and harvesting activities restored in the agricultural sector, 6 percent growth in the crop sector is achievable,
in our view, which would largely be just reverting output back to pre-conflict levels. For the industry sub-sector, which
mainly consists of construction, a gradual improvement in credit conditions and the focus on re-building and re-
construction is expected to provide a boost to this sector and allow for growth in the 8-10 percent range. Similarly for
services, it is reasonable to expect—in our view—a gradual expansion in key segments that were particularly affected
by the conflict and covid (including tourism, hospitality) alongside what have already been growing sectors such as
76
wholesale trade, banking, education, health and public administration. All considered, 2022-23 growth in the 7 percent
(or more) range is achievable, in our view, conditional on the sector-specific improvements summarized above.
Inflation
The inflation outlook remains full of uncertainties. While it looked like inflation was on a downward course in recent
months (given slight declines registered in the months of October and November), this trend was reversed in December
2021 as a significant fuel price adjustment pushed inflation back up to 35 percent. In assessing the outlook, several
notable near-term influences will be worth bearing:
• Fuel price adjustment of December 2021: A substantial 25 percent adjustment in fuel prices was put in place in
December 2021 (raising prices from Birr 25.86 to 31.74 per litre, or $0.53 to $0.64 per litre) and is likely to quickly
filter through to many goods and services, including for transportation (~3% of the CPI index) as well as some
food items. As such, it would be reasonable to expect another one or two months of elevated month-on-month
overall price increases, especially since December 2021’s transport price sub-index (up 1.4% month-on-month)
does not appear to have fully reflected yet the fuel pass price-through given delayed transport tariff
adjustments. Seen over the longer-term, given policy intentions to gradually remove fuel subsidies over the
coming year, such step-up adjustments in the fuel price will continue to bring inflationary pressures, unless
global oil prices drop materially from their current high levels ($88 per barrel as of January 2022, or up 60 percent
from year ago’s level of $55 per barrel).
• Past experience with disinflation: Taking a longer-term view, Ethiopia’s experience reducing inflation once it
has surpassed 30% generally suggests an extended period of time is required to revert back to more moderate
rates of inflation. Our review of 25 years of inflation data suggests once inflation exceeds 30 percent, it takes—
on average—16 months to fall back to 15 percent and 18 months to drop to single-digit levels. Given that the
recent inflation spike crossed 30 percent in August 2021, past experience would (all else equal) suggest a decline
to 15 percent inflation by roughly December 2022 and to single-digit inflation rates by February 2023.
• Global commodity price developments: As external prices for key commodities contributed to this year’s high
inflation, the outlook in this regard will also be important. The IMF’s WEO projections in this regard suggest
prices will mostly trend downward (2022 vs 2021), and thus provide some moderate relief, for the four items
that make up the largest shares in Ethiopia’s commodity imports: wheat prices are forecast by the IMF to rise by
9 percent in 2022, but the forecasts for other large import items show anticipated declines for fuel (-2 percent),
fertilizers (-4 percent), and vegetable oils (-5 percent).
• Policy responses: The Government has so far sought to limit inflation by a range of measures that have included:
raising reserve requirement on bank deposits (from 5% to 10%), instituting a temporary credit freeze on banks
in the second half of 2021 (also justified by exchange rate considerations), subsidizing staple goods such as
wheat and sugar, removing import duties/taxes on food items, and allowing franco valuta imports for certain
imported foodstuffs (where importers are free to use their own externally secured fx funds rather than dollars
from the banking system). Administrative measures (some COVID-related and others not) have included a freeze
on rent increases and enforcement measures against merchants deemed to be engaged in “hoarding” or “price
gouging” activities. Inflation has persisted despite all these measures, which partly raises questions about their
effectiveness/adequacy, though it also the case that inflation might have been even higher yet had these actions
not been in place. Looking ahead, it is likely that at least some sub-set of these measures will continue for most
of 2022, or until inflation is firmly on a downward trajectory.
77
Considering all of the above, we think it is reasonable to expect inflation remaining well into double-digit territory
until the end of the next fiscal year. The very near-term outlook is likely to be dominated by December’s fuel price
adjustment and we thus expect inflation will move up slightly higher and peak at about 35 to 37 percent rate as of end-
January 2022. Thereafter, based on month-on-month inflation rates of around 1.6 percent for each of the next six
months (about 0.3 percentage points higher than historical medians to account for fuel price and conflict effects), we
expect inflation can trend downwards to around 24 percent by June 2022; this seemingly optimistic drop is helped by
large month-on-month inflation rates recorded this time last year (4% m-o-m in February 2021, 3% m-o-m in March
2021, and 7% m-o-m in June 2021) that will all provide favorable base effects for this year’s inflation outturns in those
respective months. For next fiscal year (2022-23), assuming a moderation in M2/credit growth (which is already evident
in end-September’s M2 growth figures of 28 percent vs 30 percent at end-June), plus a recovery in crop output, plus
no major price spikes in global commodity markets—all of which form part of our bassline macro scenario—inflation
should drop to around 15 percent by December 2022 and further to the low teens by mid-2023.
Fiscal position
While the government budget deficit has been below 3 percent for several years, a materially higher deficit is now
likely for 2021-22 on account of conflict related revenue shortfalls and higher-than-budgeted expenditure. We
estimate that the revenue outturn will be close to Birr 380bn and that external budgetary grants will only amount to
Birr 15bn, for a total revenue and grants sum of Birr 396bn against anticipated budget expenditure of Birr 630bn (the
latter reflecting the approved budget of Birr 122bn plus supplementary expenditure added during the year). The
resultant deficit is thus expected to be around Birr 212bn, or close to 4 percent of GDP.
The funds needed to cover this year’s budget deficit will need to come mainly from domestic sources (NBE, banks,
pension funds), as supplies of foreign loans are down sharply this year. External loan financing is unlikely to exceed
$500mn, or Birr 25bn, this year, judging by the Q1 outturn (July-September 2021) of only $135mn or Birr 6bn. The
remaining Birr 187bn deficit (212bn less 25bn) will need to be funded from domestic sources and will not be helped by
large privatization inflows this year as no large transactions are expected by June 2022. The resort to large domestic
borrowing by the Government is already evident in high T-Bill issuances to date, which now stand at Birr 200bn at end
December versus Birr 119bn from the start of the fiscal year (a six-month increase of Birr 81bn). Further funding has
been and will be forthcoming from the NBE as well, whose gross lending to government—per MOF debt data—already
stood at Birr 312bn at end-September 2021, or up by Birr 30bn from the start of the fiscal year. Considering these year-
to-date financing trends (T-Bills up by Birr 81bn in the first six months and net credit from NBE up Birr 30bn in the first
quarter), it is reasonable to expect the full year deficit reaching or slightly exceeding Birr 200bn (3.7% of GDP) for this
fiscal year.
For next fiscal year, 2022-23, a return to a somewhat improved fiscal position can be envisaged as external grants
gradually pick up and revenue shocks dissipate. We assume revenue can reasonably grow by 20 percent reflecting
nominal GDP expansion of 23 percent as well as on-going tax policy measures. On the expenditure side, we expect
financing limitations will limit growth to around 20 percent. On this basis, the overall budget deficit should improve to
3.1 percent of GDP and help keep the public debt level roughly unchanged from this year’s level of around 49 percent
of GDP (thanks to a rising nominal GDP denominator).
Monetary sector
A moderate degree of monetary tightening has been initiated in the second half of 2021 and this is likely to be
continue—in our view—until at least mid-2022, when inflation should have dropped by then closer to the 20-25
percent range. Recent measures to tighten monetary policy have included a credit freeze enacted in July-December
78
2021 (subsequently removed) as well as an increase in reserve requirements from five to ten percent (since partially
reversed). Mainly reflecting these actions, the first quarter of the fiscal year showed broad money growing by only 5
percent quarter-on-quarter and 28 percent year-on-year (versus 30 percent y-o-y as at June 2021). The slowing growth
is also reflected in banks’ deposit and lending data: deposits grew just 9 percent in the six months to December 2021
(22 percent year-on-year) and loans grew 12 percent over the same six-month period (24 percent year-on-year).
For 2022-23, a more accommodative monetary policy can be envisaged and would be reasonable, as food price trends
should have moderated (with a return to normal harvests) and key supply-side constraints would be expected to have
dissipated—both of which would allow the economy to expand further in a non-inflationary manner. We project that
deposit growth would revert to the near 25 percent annual norm seen in recent years, and that credit growth would
rise in tandem to register growth of 20-25 percent.
External sector
We expect balance of payments developments to show a mixed picture this year, but on a net basis end up showing
a loss in fx reserves for the full fiscal year. Several components of Ethiopia’s forex inflows are showing unexpectedly
strong growth this year, including for exports, remittances, and service receipts (the latter reflecting airline revenue,
particularly expanded cargo operations). FDI is also on positive trend—given the circumstances—based on reported
FDI registration figures for the first five months of the fiscal year ($1.1bn in July-November 2021, or up 28 percent from
the same period last year). Offsetting these improvements, however, fx inflows from external partners are set to decline
this year: funding from several bilateral donors has been paused (other than for humanitarian assistance) and
multilateral lenders have also scaled back or suspended most of their funding. On the trade side, AGOA-related impacts
will exports somewhat, though this is unlikely to be in the magnitudes that are widely reported as only around $100mn
of Ethiopia’s textile/leather exports to US are affected (while the single biggest export to the US—namely coffee—is
still unaffected).2 In addition, a debt service relief scheme (DSSI) that had been initiated to help countries respond to
COVID has provided debt service relief up to end-2021, but its successor scheme (the Common Framework) and is yet
to be implemented and is thus likely to delay any associated debt service relief in the very near-term (till June 2022).
All in all, our balance of payments projections show an improvement in the current account deficit for this year (down
to 2.7 percent of GDP, one of the lowest rates in a decade) but a weak capital account—essentially reflecting reduced
foreign borrowing—contributing to a reserves loss for the year that will bring official fx reserves to a level of just below
$2bn by end-June 2022.
A more favorable external outlook can be envisaged for next fiscal year (2022-23), conditional on conflict de-
escalation and growing engagement with donors, creditors, trading partners, and investors. On specific BOP items,
we anticipate the next fiscal year will show continued strong export growth (18%), rising remittances (up 12%), grant
inflows of close to $1bn, and government borrowing of $1.4bn. For FDI, with the anticipated resumption of on-going
privatization activities (part privatization of the telecom company, the issuance of a second telecom license, and the
sale of sugar plants) inflows should be boosted substantially and potentially reach record levels of above $4bn. On the
exchange rate, we expect that the still-high inflation rate in the immediate period ahead (and central bank efforts to
avoid a real appreciation) will imply year-on-year depreciation rates of near 25 percent till mid-2022, followed by slower
annualized rates of closer to 20 percent for H2 2022, and then annualized depreciation rates approaching the mid-
teens by early 2023 (on the back of moderating inflation). The exchange rates implied by these year-on-year
depreciation rates would bring the currency to 54 Birr/USD by June 2022 and close to 57 Birr/USD by December 2022.
2
The removal of AGOA privileges—if prolonged—is more significant from its signaling effects and potential adverse influence on the future
FDI plans and re-location decisions of global firms. It is worth noting that offsetting measures—such as companies shifting sales to other
countries or government temporarily supporting affected firms—can limit the potential loss in AGOA exports.
79
Conclusion
Overall, our macro outlook takes the view that a growth slowdown is unavoidable this fiscal year (given
developments in the last six-month period) but that strong growth bounce back is almost inevitable next year,
conditional on the overarching assumption that there is conflict de-escalation in the immediate period ahead and a
gradual return to normalcy in farm activities, in infrastructure links, and in commerce by mid-2022. We would note
that our expectations for next year’s growth bounce back also implicitly reflect the view—widely emphasized by
policymakers as well as many observers—that the long-term fundamentals of the economy remain positive and firmly
in place. Most notably, sector growth opportunities remain vastly under-exploited and will provide multiple growth
poles for the Ethiopian economy (agriculture, mining, power, manufacturing, tourism) while policy reforms that have
been either pledged or already in the pipeline should deliver more enabling/improving conditions across wide sections
of the economy (via continued privatization, public sector improvement, ease of doing business reforms,
financial/capital market liberalization, exchange rate liberalization, and digital economy initiatives). The policy
framework and wide-ranging initiatives to be spear-headed under the Ten-Year Development Plan should further help
in these directions, especially with a much more dedicated roll-out and intensified implementation to be forthcoming
in the year ahead.
Figure 10.2: Ethiopia--Key Macro Indicators

Figure 10.3: Inflation and Exchange Rates
Actual Proj Proj
2020-21 2021-22 2022-23 Inflation Rate, Y-o-Y
GDP growth 6.3% 1.0% 6.5%
Investment/GDP 28.0% 27.0% 30.0% Dec-21 35.1%
Nominal GDP, Birr bns 4,341.4 5,759.1 7,114.3 Mar-22 30.6%
Nominal GDP, USD bns $ 110.3 $ 116.7 $ 122.9
Jun-22 24.0%
Bank deposits, Birr bn 1,361.3 1,606.3 2,007.9 Sep-22 17.4%
Bank credit, Birr bn 1,382.2 1,669.3 2,024.8
Dec-22 15.8%
Deposit growth, % 30.5% 18.0% 25.0%
Credit growth, % 27.3% 20.8% 21.3% Jun-23 12.6%
Fiscal balance, %GDP -2.7% -3.7% -3.1%

Birr/USD, End-Month
Public debt, %GDP 50.5% 49.8% 49.3%
Dec-21 49.2
Exports, USD bns $ 3.6 $ 4.4 $ 5.2
Mar-22 51.5
Imports, USD bns $ (14.3) $ (16.3) $ (19.2)
Service exports, $ bns $ 4.9 $ 5.5 $ 6.1 Jun-22 54.2
Remittances, USD bns $ 5.1 $ 5.7 $ 6.1 Sep-22 56.0
Grants, USD bns $ 1.2 $ 1.2 $ 1.4
Current account, %GDP -2.9% -3.2% -3.7%
Dec-22 57.8
FDI, USD bns $ 4.0 $ 2.9 $ 4.7 Jun-23 60.8
Net Loans--Govt, USD bns $ 0.9 $ 0.5 $ 1.3
Net Loans--SOEs, USD bns $ (0.9) $ (0.8) $ (0.5)
FX reserves, USD bns $ 2.9 $ 2.0 $ 3.2 Sources: CSA, CBE, and Cepheus projections
Sources: NPC, NBE, IMF,Cepheus estimates and projections
80
ALTERNATIVE MACRO SCENARIO FOR FY 2021-22 and 2022-23:
While prospects are positive for a de-escalation of the conflict and a return to normalcy in many productive sub-
sectors (including crops, infrastructure links, and commerce), there remains a small probability that Ethiopia faces
a prolonged low-level conflict scenario with limited progress in the various assumed areas. The below summary
highlights the opportunity costs involved with such a continued conflict scenario and also presents a sense of the
magnitudes involved.
• Crops: With crop output in the two conflict-affected regions accounting for 38 percent of the national total
(Amhara 32%, Tigray 6%), and assuming as much as a quarter/half of the affected regions show limited or no
production, then potentially as much as 9.5%/19% of national crop output and hence around 2%/4% of GDP
(given the crop sector’s 21 percent share in national GDP) is materially affected, with the corresponding loss
in incomes, livelihoods, and welfare conditions that this entails.
• Investment: The investment to GDP ratio in 2020-21 fell to its lowest level in years (28 percent of GDP), partly
reflecting COVID and global factors, but also likely due to impacts of the conflict on both domestic and foreign
investor sentiment. Reversing this decline—which is critical for long-term growth prospects—will clearly be
more difficult under a conflict scenario. Investment-to-GDP ratios in the mid-30s range have characterized
Ethiopia’s past period of strong growth and also remain a key target under the Ten-Year Development Plan.
• Inflation: Inflation is up by 16 percentage points, from 19 percent to 35 percent, between the start of the
conflict in November 2020 and now. Considering the time since the intensification/spread of the conflict (July
2021), inflation is up by 10 percentage points (from 25% to 35%). While many other factors are also at play,
direct conflict related impacts—food supply shocks, transport disruptions, precautionary purchasing—can be
expected to have accounted for at least several percentage points of this increment over the past year.
• Fiscal position: Budget deficits may not necessarily worsen in a continued conflict scenario, as additional
conflict-related expenditures have been met partly by cutbacks to previously planned spending (typically on
capital expenditure ). Given the high share of capital spending in the budget (33% of total), this does provide
significant leeway to re-allocate expenditure to conflict-related expenses; however, such re-allocations would
be done at the expense of needed developmental investments in areas such as roads, health, and education.
• External position: Multiple sources of foreign exchange will be impacted under continued conflict, including
some portion of AGOA-related exports (~$100mn), tourism inflows (~1bn pre-conflict), and grants and loans
to government (which fell to $1.2bn and $1.0bn respectively last year but showed $1.5bn and $1.8bn in
average annual inflows respectively for the prior five years). FDI may not be immediately impacted, as appears
to be the case so far, but longer term impacts on investor sentiment can materially reduce future flows.
Overall, a near-term outlook involving either a ‘continued low-level conflict’ or a ‘prolonged stalemate scenario’
would involve much lower/negative growth, continued high inflation, possibly higher deficits, and a weaker
external position on account of both lower ‘aid-related’ and private/FDI inflows. Most notably for the private
sector, the tight conditions with respect to credit availability (reflecting greater domestic borrowing by the
Government) and fx access (reflecting large surrender requirements on the private sector) would be aggravated
from their current norms—implying even further strains on the operations and finances of private firms. Needless
to say, Ethiopia can ill-afford any of these outturns taken individually; collectively and cumulatively the potential
scale of foregone economic opportunities becomes that much more significant.
81
MONETARY SECTOR
APPENDIX TABLES—Tables of Contents
1. GDP Data Table………………………………………………………………………………...….Page 83
2. Budget Details for the Current Fiscal Year 2021-22, Part 1.…………………..Page 84
3. Budget Details for the Current Fiscal Year 2021-22, Part 2 …………………..Page 85
4. Public Sector Debt Summary ………………………………………………………………..Page 86
5. Treasury Bills Market, 2021 Developments …………………………………………..Page 87
6. Exports by Country and Commodity, Part 1 …………………………………………..Page 88
10. Imports by Country and Commodity, Part 1 …………………………………………..Page 92
14. Macroeconomic Indicators Summary, Part 1 ………………………………………...Page 96
15. Macroeconomic Indicators Summary, Part 2 …………………………………….…..Page 97
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Appendix 1: Ethiopia-- GDP Statistics
Fiscal Year basis 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Ethiopian Calender Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
GDP, GNI, and GNDI levels (Birr bns)
GDP at basic market prices 690.4 796.3 974.7 1,192.8 1,449.4 1,704.0 2,062.5 2,538.2 3,183.0 4,119
Taxes on products 56.9 70.6 86.1 105.1 118.7 128.8 137.6 152.6 119.4 222.0
GDP at current market prices 747.3 866.9 1,060.8 1,298.0 1,568.1 1,832.8 2,200.1 2,690.8 3,374.3 4,341.4
Income from Rest of World (1.7) (1.9) (2.9) (5.3) (5.1) (10.9) (9.9) (16.5) (18.3) (21.7)
GNI at curent market prices 745.7 865.0 1,057.9 1,292.7 1,563.0 1,821.9 2,190.3 2,674.2 3,356.1 4,319.7
Transfers from Rest of World 86.8 93.4 106.4 128.4 156.0 155.0 191.3 226.2 218.0 300
GNDI at current market prices 745.7 865.0 1,057.9 1,292.7 1,718.9 1,976.9 2,381.6 2,900.4 3,574.1 4,619.9
GDP at constant market prices (Birr bns) 559.6 618.8 682.3 753.2 1,568.1 1,718.1 1,835.2 1,988.7 2,109.1 2,228
GDP in Dollar Terms (USD bns)

GDP at market prices, USD bns $ 43.2 $ 47.6 $ 55.5 $ 64.5 $ 74.1 $ 81.6 $ 83.9 $ 95.7 $ 106.8 $ 111.3
GDP per capita (in USD) $ 516 $ 554 $ 631 $ 716 $ 804 $ 865 $ 869 $ 970 $ 1,059 $ 1,092
Exchange rate, year-average, Birr/USD 17.28 18.23 19.11 20.13 21.16 22.47 26.23 28.12 31.59 39.36
GDP Composition, supply-side Birr bns (at constant basic prices)

Agriculture 222.9 238.8 251.8 267.8 544.1 580.4 600.8 623.8 650.3 686.4
Industry 59.6 73.9 86.5 103.7 343.9 414.7 467.5 526.2 576.9 618.8
Services 237.4 258.8 292.5 325.0 575.9 619.3 671.8 747.3 786.8 836.2
GDP Composition, demand-side, Birr bns (at constant basic prices)

Private consumption 541.5 636.9 745.0 896.2 1,042.3 1,219.4 1,444.7 1,848.1 2,360.9 3,135
Government consumption 62.0 77.6 98.1 117.0 174.6 203.6 225.5 247.4 307.8 384
Investment 277.2 295.5 402.9 511.6 585.7 704.6 751.6 948.9 1,037.7 1,217
Net Exports (133.5) (143.1) (185.2) (271.7) (302.2) (290.4) (318.0) (348.1) (332.0) (393.8)
Exports of Goods and Services 102.9 108.2 123.5 121.5 122.5 139.8 184.2 213.6 239.2 330
Imports of Goods and Services 236.4 251.3 308.7 393.2 424.8 430.2 502.2 561.7 571.2 723
Growth rates (in percent)

Real GDP 8.6% 10.6% 10.3% 10.4% 8.0% 10.2% 7.7% 9.0% 6.1% 6.3%
Nominal GDP 45.1% 16.0% 22.4% 22.4% 18.2% 16.9% 20.0% 22.3% 25.4% 28.7%
Agriculture 4.9% 7.1% 5.4% 6.4% 2.3% 6.7% 3.5% 3.8% 4.2% 5.5%
Industry 19.7% 24.0% 17.1% 19.9% 20.5% 20.6% 12.7% 12.6% 9.6% 7.3%
Services 9.6% 9.0% 13.0% 11.1% 8.6% 7.5% 8.5% 11.2% 5.3% 6.3%
Private consumption 45.1% 17.6% 17.0% 20.3% 16.3% 17.0% 18.5% 27.9% 27.7% 32.8%
Government consumption 16.7% 25.1% 26.4% 19.2% 27.2% 16.6% 10.8% 9.7% 24.4% 24.6%
Investment 67.6% 6.6% 36.4% 27.0% 14.5% 20.3% 6.7% 26.2% 9.4% 17.2%
Net exports 74.4% 7.2% 29.4% 46.7% 11.3% -3.9% 9.5% 9.5% -4.6% 18.6%
Cross-country comparisons
GDP per capita vs SSA average, % 29.6% 31.1% 34.1% 38.0% 48.1% 57.5% 55.7% 61.0% 66.8% 73.6%
GDP per capita vs WORLD average, % 4.9% 5.2% 5.9% 6.5% 7.8% 8.4% 8.0% 8.5% 9.3% 10.0%
Source: NBE and MoPD for Ethiopia data; World Bank for SSA and WORLD GDP per capita data
The latest GDP data from NPC uses FY 2015-16 as the base year and provides a five year time series from 2015-16 to 2019-20.
Earlier GDP data use a different base year and thus not strictly comparable (thus series breaks between FY 2014-15 and 2015-16).
83
Appendix 2: Federal Government Expenditure Allocation--By Detailed Line-items, Birr bns
Total Expenditure by detailed government department/agency/unit
2018 2019 2020 2021 Birr change 2018 2019 2020 2021 Birr change
Total Federal Govt Expenditure 205.3 240.2 293.7 345.7 52.07
1 Administration and General 35.48 38.67 47.11 59.67 12.56 2 Economy 75.7 93.3 113.5 127.3 13.9
1.1 Organ of State 3.33 4.43 7.38 6.16 (1.22) 2.1 Agricultural and Rural Development 13.98 14.55 15.31 18.50 3.19
Ministry of Peace … 0.58 3.29 4.32 1.02 Ministry of Agriculture 12.25 12.59 13.10 16.13 3.03
Palace Administration 0.68 … 0.72 0.91 0.19 Ethiopian Agricultural Research Institute 0.80 0.85 0.90 0.93 0.02
House of The People's Representatives 0.32 0.31 0.38 0.39 0.01 Ethiopian Environment and Forest Research Institute 0.12 0.33 0.10 0.36 0.26
Office of the Prime Minister 0.13 0.14 0.21 0.23 0.02 Environment, Forest and Climate Change Commission 0.07 0.08 0.20 0.21 0.01
Office of the Auditor General 0.10 0.09 0.10 0.11 0.02 Ethiopian Coffee and Tea Development and Marketing Authority 0.16 0.17 0.07 0.20 0.13
Office of the National Election Board 0.41 2.54 2.59 0.09 (2.49) Ethiopian Institute of Bio-Diversity 0.10 0.16 0.15 0.16 0.01
House of the Federation 0.07 0.04 0.04 0.05 0.01 National Animal Genetic Improvement Institute 0.11 0.11
Office Of The President 0.03 0.03 0.03 0.03 0.00 The National Institute for Control and Eradication of Tsetse Fly
0.08
and Trypanosomosis
0.08 0.08 0.09 0.01
Council of Constitutional Inquiry 0.02 0.02 0.02 0.02 0.00 Veterinary Drug and Animal Feed Administration and Control0.06 Authority 0.07 0.07 0.09 0.02
Center for the Study of Constitution and Federalism 0.01 0.01 Agricultural Transformation Agency 0.13 0.08 0.07 0.07 0.00
Ministry Of Federal and Pastoral Development
1.58 Affairs … … … …. Federal Cooperative Agency 0.05 0.05 0.06 0.07 0.01
- Ethiopian Agricultural Research Council Secretariat 0.03 0.04 0.04 0.05 0.00
1.2 Justice and Security 6.77 8.06 10.41 12.41 1.99 Ethiopia Commodity Exchange Authority 0.05 0.05 0.05 0.04 (0.01)
Federal Police Commission 2.60 3.15 4.62 5.12 0.50 Ethiopian Horticulture and Agricultural Investment Authority 0.07 … … … …
Federal Prison Administration 0.99 1.11 1.31 1.48 0.17
Information Network Security Agency 1.03 1.05 0.86 0.92 0.06 2.2 Water Resources & Energy 12.34 17.5 21.5 17.6 (3.9)
National Intelligence and Security Service 0.61 0.42 0.73 0.92 0.19 Irrigation Development Commission 11.69 14.17 16.10 12.10 (4.00)
Federal Courts 0.41 0.66 0.97 0.91 (0.06) Water Development Commission 0.21 1.86 4.21 3.80 (0.41)
Ethiopian Police University .. … … 0.77 ... Basins Development Authority 0.13 0.64 0.51 0.55 0.05
Federal Attorney General 0.57 0.60 0.70 0.75 0.05 Ministry of Water, Irrigation and Energy … 0.52 0.41 0.46 0.05
Emigration, Citizenship and Vital Events Agency
0.08 0.45 0.44 0.48 0.05 National Meteorology Agency 0.16 0.14 0.13 0.30 0.17
Artificial Intelligence Center 0.29 0.29 Ethiopian Rural Energy Development and Promotion Center … … …. 0.20 …
Documents Authentication and Registration 0.12
Office 0.14 0.17 0.20 0.02 Water Technology Institute … 0.19 0.05 0.12 0.06
Federal Ethics And Anti-Corruption Commission
0.07 0.07 0.10 0.11 0.01 Ethiopian Energy Authority 0.02 0.03 0.03 0.04 0.01
Ethiopian Human Right Commission 0.07 0.07 0.10 0.10 0.01 Water Development Fund 0.01 0.02 0.02 0.02 0.00
Institution of The Ombudsman 0.06 0.06 0.08 0.09 0.01
Justice and Legal System Research and Training
0.05 Institute
0.07 0.08 0.08 0.01 2.3 Trade and Industry 1.29 2.11 2.48 3.25 0.77
Agency for Civil Society Organization 0.05 0.05 0.07 0.07 0.01 Ministry of Trade and Industry 0.21 0.37 0.98 1.56 0.58
Financial Intelligence Center 0.03 0.03 0.04 0.04 0.00 Textile Industry Development Institute 0.26 0.60 0.47 0.44 (0.02)
Administrative Boundary and Identity Issues Commission Office 0.03 0.03 Ethiopian Standards Agency 0.11 0.23 0.07 0.23 0.16
Office of the Reconciliation Commission 0.02 0.02 Metals Industry Development Institute 0.10 0.21 0.21 0.20 (0.02)
Federal Tax Appeal Commission 0.02 0.02 0.02 0.02 0.00 Leather Industry Development Institute 0.10 0.13 0.15 0.17 0.02
Agency For Refugee and Returnee Affairs … 0.06 0.05 … …. Chemical and Construction Inputs Industry Development Institute
0.09 0.10 0.10 0.11 0.01
Transfer 0.04 0.04 0.10 …. …. Ethiopian Investment Commission 0.06 0.09 0.10 0.11 0.01
- Public Enterprises Holding and Administration Agency 0.10 0.10 0.10 0.10 0.00
1.3 Defense 15.00 15.00 16.50 22.00 5.50 Federal Small and Medium Manufacturing Industry Development0.07 Agency0.07 0.08 0.08 0.01
Ministry of National Defense 15.00 15.00 16.50 22.00 5.50 Food, Drink and Pharmaceutical Industry Development Institute
0.06 0.06 0.06 0.07 0.01
- Ethiopian Meat and Dairy Industry Development Institute 0.06 0.06 0.06 0.07 0.01
1.4 General Service 10.38 11.18 12.83 19.11 6.28 Ethiopian Kaizen Institute 0.04 0.04 0.04 0.05 0.01
Ministry of Revenue and Customs Authority 2.49 3.23 4.35 5.66 1.31 Trade Practice and Consumers' Protection Authority 0.04 0.04 0.04 0.04 0.00
Ministry of Foreign Affairs 2.98 3.00 3.09 3.86 0.77 Ethiopian National Accreditation Office 0.01 0.01 0.02 0.02 0.00
Ministry of Finance 1.13 1.23 1.18 2.43 1.25
Job Opportunity Creation Commission … 0.04 0.07 2.37 2.30 2.4 Mines 0.21 0.18 0.18 0.41 0.23
Ministry of Innovation and Technology 0.94 1.11 1.26 1.30 0.03 Ministry of Mines & Petroleum 0.08 0.07 0.07 0.32 0.24
Central Statistics Agency 1.27 0.56 0.57 0.59 0.02 Geological Surveys of Ethiopia 0.14 0.12 0.11 0.10 (0.02)
Meles Zenawi Leadership Academy 0.30 0.31 0.20 0.36 0.16
Ethiopian Space Science and Technology Institute
0.12 0.18 0.26 0.30 0.04 2.5 Transport and Communication 2.54 2.29 3.04 3.72 0.67
Geospatial Information Institute … 0.16 0.23 0.30 0.06 Maritime Affairs Authority 0.71 0.87 1.54 1.59 0.05
Technology and Innovation Institute 0.03 0.14 0.22 0.29 0.07 Transport Authority 0.68 0.71 0.78 1.53 0.75
Diaspora Agency … 0.23 0.23 0.24 0.01 Ethiopian Civil Aviation Authority 0.36 0.36 0.37 0.40 0.03
Ethiopian News Agency 0.15 0.11 0.15 0.23 0.08 Ministry of Transport 0.10 0.18 0.13 0.15 0.02
Ethiopian Biotechnology Institute 0.14 0.16 0.19 0.19 0.00 Insurance Fund Administration Agency 0.02 0.03 0.04 0.05 0.01
Republican Security Force … 0.14 0.17 0.18 0.01 Ethiopian Press Agency 0.14 0.15 0.19 … …
Civil Service Commission … 0.18 0.17 0.17 0.00 Ministry of Communication and Information Technology 0.53 … … … …
Policy Study Institute 0.08 0.09 0.10 0.11 0.01
Institute of Strategic Affairs 0.09 0.09 2.6 Urban Development and Construction 45.33 56.59 70.99 83.82 12.83
Ethiopian Communications Authority… … 0.07 0.08 0.01 Ethiopian Roads Authority 38.92 46.70 58.82 67.45 8.63
Planning and Development Commission 0.05 0.05 0.05 0.05 0.00 Ministry of Urban and Construction 3.22 5.91 6.53 7.78 1.25
National Metrology Institute of Ethiopia 0.04 0.04 0.05 0.05 0.00 Federal Urban Job Creation and Food Security Agency 2.54 3.32 4.83 7.56 2.73
Ethiopian Broadcast Authority 0.16 0.05 0.05 0.05 0.00 Construction Project Management Institute 0.28 0.35 0.37 0.60 0.22
The Accounting and Auditing Board of Ethiopia
0.04 0.04 0.04 0.04 0.00 Federal Urban Land & Land Related Property Registration & Information
0.19 0.12
Agency 0.25 0.24 (0.01)
Public Procurement and Property Disposal 0.01
Service 0.02 0.03 0.04 0.01 Construction works Inspection Authority 0.12 0.12 0.12 0.13 0.01
Ethiopian Radiation Protection Authority 0.03 0.03 0.03 0.04 0.01 Integrated Infrastructure Development Coordinating Agency 0.06 0.06 0.07 0.04 (0.02)
Ethiopian Intellectual Property Office 0.02 0.02 0.03 0.03 0.00 Road Fund Office 0.01 0.01 0.01 0.02 0.01
Public Procurement and Property Administration
0.02 Agency
0.02 0.02 0.03 0.01
Grand Renaissance Dam Coordination Project0.02Office 0.03 0.01 0.02 0.01
Ethiopian Foreign Relation Strategic Studies
0.01
Institute 0.01 0.01 … ….
Ministry of Public Service and Human Development
0.21 … … … …
Source: MOFEC budget document
84
Disclaimer: This report represents solely the views, analysis, and judgement of the Cepheus research team and does not necessarily reflect the views or opinions of
the Fund’s Managing Partners, Advisors, or Investors.
Appendix 3: Federal Government Expenditure Allocation--By Detailed Line-items, Birr bns

2018 2019 2020 2021 Birr change 2018 2019 2020 2021 Birr change
3 Social 58.46 68.01 80.69 99.29 18.61
3.1 Education 43.31 50.56 56.80 66.06 9.27 3.2 Culture and Sport 3.48 3.75 3.53 3.64 0.11
Addis Ababa University 1.98 2.22 2.59 2.97 0.38 Sport Commission 2.68 2.87 2.64 2.66 0.02
Mekele University 1.48 1.74 1.90 2.67 0.77 National Archive and Library Agency 0.16 0.19 0.22 0.23 0.01
Bahir Dar University 1.60 1.90 2.14 2.30 0.16 Ministry of Culture and Tourism 0.09 0.14 0.15 0.16 0.01
Jimma University 1.56 1.77 1.92 2.06 0.14 Ethiopian Wildlife Conservation Authority 0.12 0.13 0.14 0.15 0.01
Hawassa University 1.43 1.68 1.84 2.00 0.16 Authority for Research and Conservation of Cultural Heritage 0.10 0.21 0.11 0.13 0.02
Gonder University 1.43 1.65 1.81 1.96 0.15 Ethiopian Youth Sports Academy 0.12 0.07 0.08 0.09 0.01
Haramaya University 1.31 1.56 1.72 1.88 0.16 Catering and Tourism Training Institute 0.05 0.06 0.06 0.07 0.01
Wachemo University 0.86 0.98 1.08 1.79 0.71 Athlete Tirunesh Dibaba Sport Training Center … 0.04 0.05 0.06 0.01
Arba Minch University 1.23 1.44 1.59 1.75 0.15 Ethiopia National Theater 0.03 0.04 0.05 0.06 0.01
Addis Ababa Science and Technology University
1.07 1.22 1.66 1.71 0.05 Ethiopia National Anti-Doping Office 0.01 0.01 0.02 0.02 0.00
Dilla University 1.20 1.33 1.43 1.55 0.12 -
Medewollabo University 1.03 1.21 1.34 1.55 0.20 3.3 Health 10.84 12.79 19.38 20.43 1.05
Jigjiga University 1.04 1.22 1.36 1.47 0.11 Ministry of Health 8.89 10.62 15.87 15.99 0.12
Wolayita Sodo University 1.02 1.13 1.24 1.41 0.16 St. Paul Hospital Millennium Medical College 1.33 1.50 1.59 1.92 0.33
Wellega University 1.02 1.15 1.26 1.39 0.13 Ethiopian Health Insurance Agency 0.18 0.19 0.33 0.71 0.38
Semera University 0.94 1.01 1.09 1.37 0.28 All Africa Leprosy, Tuberculosis and Rehabilitation Training Center 0.40 0.45 0.05
Ambo University 1.08 1.20 1.30 1.36 0.06 Ethiopian Food, Drug and Health Care Administration And Control
0.21 Authority
0.23 0.28 0.32 0.04
Mizan/Teppi University 1.01 1.07 1.14 1.33 0.19 Saint Peter Specialized Hospital 0.25 0.27 0.03
Wollo University 0.97 1.07 1.17 1.33 0.16 Ethiopian Public Health Institute 0.13 0.14 0.21 0.24 0.04
Ministry of Science and Higher Education 4.99 6.12 1.39 1.30 (0.08) Eka Kotebe Mental and General Hospital … … 0.17 0.20 0.03
Debrebirhan University 0.90 0.98 1.05 1.29 0.24 Amanuel Mental Specialized Hospital … … 0.15 0.17 0.02
Adama Science and Technology University 1.03 1.08 1.16 1.28 0.12 National Blood Bank Service 0.08 0.08 0.10 0.11 0.01
Ministry of Education … … 1.23 1.28 0.05 National HIV/AIDS Prevention & Control Secretariat 0.02 0.02 0.04 0.04 0.00
Axum University 0.95 1.06 1.18 1.27 0.09
Debremarkos University 0.96 1.07 1.15 1.24 0.09 3.4 Labor and Social Affairs 0.11 0.18 0.21 0.23 0.02
Arsi University 0.84 0.98 1.12 1.23 0.11 Ministry of Labor and Social Affairs 0.06 0.10 0.11 0.13 0.02
Debre Tabor University 0.75 0.90 1.10 1.20 0.10 Ministry of Women, Children and Youth Affairs 0.05 0.08 0.10 0.11 0.01
Dire Dawa University 0.86 0.94 1.01 1.15 0.14
Welkitie University 0.86 0.99 1.07 1.13 0.05 3.5 Prevention and Rehabilitation 0.72 0.73 0.77 8.93 8.16
Adigrat University 0.83 0.96 1.07 1.12 0.05 National Disaster Risk Management Commission 0.08 0.73 0.77 8.93 8.16
Metu University 0.84 0.99 1.07 1.12 0.05 The Strategic Food Reserve Agency 0.64 … … … …
Woldiya University 0.77 0.94 1.05 1.10 0.05
Bule Hora University 0.79 0.93 1.01 1.08 0.07 4 Others 35.67 40.23 52.38 59.44 7.05
National Educational Assessment and Examination
0.44 Agency
0.46 0.44 1.05 0.61 4.1 Transfer 5.64 0.90 2.04 3.04 1.01
Oda Bultum University 0.19 0.27 0.68 1.01 0.33 Industrial Parks Development Corporation 5.10 … … 1.19 ….
Selale University 0.19 0.26 0.71 1.01 0.30 Ethiopian Electric Power … 0.30 1.00 1.00 -
Mekdela Amba University 0.15 0.25 0.73 1.00 0.27 Public Service Employee Transport Service Enterprise 0.10 0.27 0.28 0.30 0.02
Dembi Dolo University 0.15 0.25 0.71 1.00 0.29 Public Employees Social Security Agency … … … 0.22 …
Kebridehar University 0.15 0.25 0.83 1.00 0.17 Ethiopian Airports Enterprise 0.37 0.30 0.20 0.17 (0.03)
Raya University 0.15 0.25 0.74 0.99 0.26 Ethiopian Broadcasting Corporation … … 0.50 0.10 (0.40)
Debark University 0.15 0.25 0.79 0.99 0.21 Tourism Ethiopia … … 0.04 0.04 -
Bonga University 0.15 0.25 0.74 0.99 0.25 Ethiopian Patriotic Association 0.01 0.01 0.01 0.02 0.00
Injibara University 0.15 0.25 0.69 0.99 0.30 Ethiopian Acadamy of Sciences 0.05 0.01 0.01 0.01 -
Werabe University 0.15 0.25 0.69 0.99 0.30 Ethiopian Red Cross Association 0.01 0.01 0.01 0.01 -
Assosa University 0.73 0.86 0.94 0.99 0.04
Jinka University 0.15 0.25 0.67 0.99 0.32 4.2 Debt 22.51 25.22 36.98 45.12 8.13
Gambella University 0.53 0.62 0.76 0.79 0.04 External Debt 14.25 15.41 21.51 31.81 10.31
Federal Technical Vocational Education and
0.28
Training Agency
0.31 0.49 0.57 0.08 Internal Debt 8.26 9.81 15.48 13.30 (2.17)
Ethiopian Civil Service University 0.48 0.51 0.51 0.52 0.02
Federal Technical Vocational Education and
0.40
Training Institute
0.44 0.33 0.36 0.03 4.3 Contingencies 7.52 14.11 13.36 11.28 (2.08)
Borena University … … … 0.08 … Provision For Salary and Operating Expenditure 6.51 13.10 12.35 10.27 (2.08)
Higher Education Relevance and Quality Agency
0.04 0.04 0.05 0.05 0.01 Commitments 1.00 1.00 1.00 1.00 -
Higher Education Strategy Center 0.05 0.04 0.04 0.04 0.00 Provision For Bank Charges 0.01 0.01 0.01 0.01 -
Source: MOFEC budget document
85
Appendix 4A :Total Public Debt Summary, USD mns
USD % of Total USD % USD % USD % USD %
Total Public Debt 50,800 100% 53,711 100% 55,294 100% 55,622 100% 56,654 100%
External Debt 25,812 51% 27,076 50% 28,895 52% 29,519 53% 29,052 51%
Central Government 14,751 29% 15,974 30% 18,038 33% 19,489 35% 19,388 34%
State Owened Enterprises 11,061 22% 11,102 21% 10,857 20% 10,030 18% 9,664 17%
Domestic Debt 24,988 49% 26,635 50% 26,399 48% 26,103 47% 27,602 49%
Central Government 12,515 25% 12,360 23% 12,360 22% 13,746 25% 14,551 26%
State Owened Enterprises 12,473 25% 14,275 27% 14,039 25% 12,357 22% 13,051 23%
Source: MoF Public Debt Bulletin
Appendix 4B :Total EXTERNAL Debt, USD mns
USD % of Total USD % USD % USD % USD %
Total External Public Debt 25,812 100% 27,076 100% 28,895 100% 29,519 100% 29,052 100%
Central Government Ext Debt 14,751 57% 15,973 59% 18,038 62% 19,489 66% 19,388 67%
By lender
Multilaterals 10,260 40% 11,500 42% 13,320 46% 14,532 49% 14,510 50%
Bilaterals 3,481 13% 3,464 13% 3,707 13% 3,946 13% 3,867 13%
Private lenders 1,010 4% 1,010 4% 1,010 3% 1,010 3% 1,010 3%
Of which: Eurobond 1,000 4% 1,000 4% 1,000 3% 1,000 3% 1,000 3%
State Enterprise External Debt 7,563 29% 7,290 27% 7,242 25% 6,693 23% 6,481 22%
with Govt-Guarantees
State Enterprise External Debt 3,497 14% 3,812 14% 3,614 13% 3,337 11% 3,183 11%
without Govt-Guarantees
Appendix 4C :Total Domestic Debt, Birr bns
Birr% of Total Birr % Birr % Birr % Birr %
Total Public DOMESTIC Debt 643 100% 774 100% 919 100% 1,141 100% 1,272 100%
Government Domestic Debt 301 47% 362 47% 432 47% 601 53% 671 53%
By lender
National Bank of Ethiopia 160 25% 195 25% 230 25% 282 25% 312 25%
Pension Funds 78 12% 104 13% 134 15% 182 16% 192 15%
Commercial Bank of Ethiopia 27 4% 27 3% 27 3% 69 6% 105 8%
Development Bank of Ethiopia 33 5% 33 4% 33 4% 54 5% 54 4%
Private Banks - 0% 1 0% 6 1% 13 1% 7 1%
Others (non-banks, non-funds) 3 0% 3 0% 3 0% 2 0% 2 0%
State Enterprise Domestic Debt 342 53% 412 53% 487 53% 540 47% 602 47%
Development Bank of Ethiopia 2 0% 2 0% 2 0% 2 0% 2 0%
Commercial Bank of Ethiopia 340 53% 410 53% 485 53% 538 47% 600 47%
86
Appendix 5 : Government Treasury Bill Auctions

T-Bills of 28 Days Mauturity 13-Jan 27-Jan 07-Feb 24-Feb 10-Mar 24-Mar 07-Apr 21-Apr 05-May 19-May 02-Jun 16-Jun 30-Jun 14-Jul 21-Jul 28-Jul 11-Aug 25-Aug 08-Sep 22-Sep 06-Oct 20-Oct 03-Nov 17-Nov 01-Dec 29-Dec
Bids Offered, Birr mns 400 600 600 1,000 1,000 1,500 1,500 1,500 4,000 6,000 4,000 3,000 2,000 5,000 7,000 4,000 3,000 3,000 3,000 3,000 3,000 1,500 500 500 100 500
Bids Received, Birr mns 460 770 1,115 1,250 350 1,930 2,200 2,400 3,700 4,152 6,370 6,409 3,475 3,735 7,830 3,950 3,500 3,930 235 3,360 905 4,385 555 3,360 405 405
Bids Accepted, Birr mns 460 720 1,040 1,250 350 1,880 1,500 2,400 3,700 4,152 4,000 6,409 3,275 3,735 7,300 3,450 3,500 3,930 235 3,360 905 4,385 555 3,360 405 405
Bid-cover ratio, % 100% 107% 107% 100% 100% 103% 147% 100% 100% 100% 159% 100% 106% 100% 107% 114% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Cut-off price, Birr cents 99.42 99.39 99.39 99.37 99.4 99.25 99.20 99.20 99.20 99.15 99.42 99.16 99.15 99.01 99.35 99.15 99.30 99.39 99.40 99.39 99.23 99.23 99.39 99.39 99.40 99.40
Cut-off yield, %* 7.6% 8.0% 8.0% 8.3% 7.7% 9.8% 10.5% 10.5% 10.6% 11.2% 7.6% 11.0% 11.2% 13.0% 8.5% 11.2% 9.2% 8.0% 7.9% 8.0% 10.1% 10.1% 8.0% 8.0% 7.9% 786.9%
Weighted average Price 99.5 99.4 99.4 99.4 99.4 99.3 99.3 99.3 99.2 99.2 99.4 99.4 99.4 99.3 99.4 99.4 99.4 99.4 99.4 99.4 99.3 99.4 99.4 99.4 99.4 99.4
Weighted average Yield 6.0% 7.4% 7.5% 7.8% 7.7% 9.3% 9.4% 9.8% 10.4% 10.8% 7.6% 8.4% 8.4% 9.8% 7.9% 8.5% 8.1% 7.9% 7.9% 8.0% 9.1% 8.3% 7.9% 8.0% 7.9% 7.9%
Cumulative gross issues: 6,140 6,860 7,900 9,150 9,500 11,380 12,880 15,280 18,980 23,132 27,132 33,541 36,816 40,550 47,850 51,300 54,800 58,730 58,965 62,325 63,230 67,615 68,170 71,530 71,935 72,340
Bids Offered, Birr mns 3,800 5,200 3,200 5,000 5,000 7,000 4,500 7,000 5,000 2,000 5,000 12,000 3,500 15,000 14,000 12,000 10,000 12,000 12,000 12,000 14,000 4,000 2,000 1,000 200 500
Bids Received, Birr mns 1,806 6,000 4,260 2,950 2,220 3,640 4,400 7,800 4,821 3,710 9,500 17,700 7,300 6,447 16,130 5,750 12,460 14,500 1,200 1,900 2,600 20,147 1,150 175
Bids Accepted, Birr mns 1,806 5,900 4,260 2,950 2,220 3,640 4,400 7,800 4,821 2,000 5,000 17,700 6,200 6,047 14,000 3,500 12,460 14,500 1,200 1,900 18,197 1,150 175
Bid-to-cover ratio, % 100% 102% 100% 100% 100% 100% 100% 100% 100% 186% 190% 100% 118% 107% 115% 164% 100% 100% 100% 100% 111% 100% 100%
Cut-off price, Birr cents 97.8 98.2 97.6 97.6 98 96.7 96.7 96.5 96.5 996.4 98.0 96.8 96.8 96.5 98.0 96.7 97.7 96.9 97.3 97.3 96.5 97.8 97.8
Cut-off yield, %* 9.2% 7.4% 9.7% 10.0% 10 13.6% 13.9% 14.6% 14.6% 15.0% 8.0% 13.5% 13.5% 14.5% 8.1% 13.7% 9.4% 13.0% 11.1% 11.1% 14.6% 9.0% 9.0%
Weighted average Price 98.2 98.2 98.1 98.0 98 97.3 97.1 96.9 96.7 96.8 98.0 97.7 97.5 97.2 98.0 97.8 98.0 98.0 97.3 97.3 97.8 97.8 97.8
Weighted average Yield 7.3% 7.4% 7.6% 8.0% 8.6% 11.0% 12.1% 12.9% 13.7% 13.4% 8.0% 9.4% 10.2% 11.6% 8.1% 8.8% 8.4% 8.3% 11.1% 11.1% 91.0% 9.0% 2.0%
Total gross cumulative issuance: 63,813 70,433 75,733 79,933 82,503 88,023 93,923 104,123 112,644 118,796 127,796 151,905 161,380 171,161 192,461 199,411 215,371 233,801 235,236 240,496 241,401 263,983 265,688 269,223 269,628 270,033
Bids Offered, Birr mns 7,800 10,500 7,500 6,000 5,000 7,500 5,000 7,000 4,000 2,000 4,000 15,000 3,500 15,000 15,000 12,000 10,000 12,000 12,000 12,000 12,000 5,500 13,500 3,500 700 4,000
Bids Received, Birr mns 1,024 1,500 3,000 1,600 1,720 1,240 1,300 2,800 1,800 1,290 6,500 6,200 4,177 2,732 11,550 2,450 13,200 8,500 1,340 2,000 1,450 4,560 2,950 4,970 4,105 1,977
Bids Accepted, Birr mns 1,024 1,500 3,000 1,600 1,720 1,240 1,300 2,800 1,800 1,290 4,000 5,200 4,177 2,732 11,350 2,450 13,200 8,500 1,340 2,000 1,250 4,560 2,950 4,970 4,105 1,977
Bid-to-cover ratio, % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 163% 119% 100% 100% 102% 100% 100% 100% 100% 100% 116% 100% 100% 100% 100% 100%
Cut-off price, Birr cents 97 96 96 96 96 96 96 96 95 95 96 95 94 95 95 94 95 96 96 96 95 96 95 95 95 95
Cut-off yield, %* 9.19% 7.49% 7.92% 8.03% 8.25% 8.47% 8.57% 8.79% 10.11% 10.33% 8.27% 10.22% 12.50% 11.63% 10.56% 12.48% 10.11% 9.45% 9.45% 9.45% 9.56% 9.45% 10.11% 10.33% 9.67% 10.33%
Weighted average Price 98 96 96 96 96 96 96 96 95 95 96 95 95 95 96 95 96 96 96 96 95 96 95 96 96 95
Bids Offered, Birr mns 3,000 10,500 3,700 3,000 4,000 4,000 4,000 4,500 2,000 2,000 2,000 10,000 4,000 5,000 4,000 2,000 3,000 3,000 3,000 3,000 5,000 4,000 20,000 20,000 15,000 11000
Bids Received, Birr mns 1,457 1,500 1,400 2,370 2,090 1,736 2,255 2,746 2,195 2,600 3,664 3,620 1,714 1,827 603 665 3,838 1,168 692 1,123 32,630 12,355 14,792 12,701 1,589 8089
Bids Accepted, Birr mns 1,457 1,500 1,400 2,370 2,090 1,736 2,255 2,746 2,195 2,600 2,000 3,120 1,714 1,827 603 665 3,838 1,168 692 1,123 32,630 12,355 14,792 12,701 1,589 8089
Bid-to-cover ratio, % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 183% 116% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Cut-off price, Birr cents 97 96 92 92 92 92 92 92 92 91 92 91 89 88 91 91 91 92 92 92 93 92 92 91 92 91.5
Cut-off yield, %* 7.27% 7.49% 9.30% 9.32% 9.99% 9.32% 9.32% 9.32% 9.32% 9.92% 8.68% 9.44% 12.50% 14.00% 9.68% 9.68% 9.68% 9.32% 9.32% 9.32% 8.00% 9.31% 9.32% 0.53% 9.32% 9.315
Weighted average Price 97 96 92 92 92 92 92 92 92 91 92 91 90 90 91 91 92 92 92 92 93 92 92 92 92 92.805
Source: NBE website and Cepheus Research compilation
87
Appendix 6A: TOP 10 Commodities-By Country
1. Coffee 2. Gold
Saudi Arabia 132.5 14.2 Switzerland 672.0 100.0
United States 127.9 13.7 Total 672.0 100.0
Germany 97.3 10.4
Belgium 77.9 8.3 3. Flower
S.Korea 59.9 6.4 Netherlands 278.9 61.8
Japan 55.4 5.9 Saudi Arabia 43.8 9.7
China, Mainland 33.6 3.6 United Kingdom 9.4 2.1
France 25.2 2.7 United States 8.9 2.0
Sudan 22.7 2.4 UAE 8.8 2.0
Italy 22.5 2.4 Japan 8.0 1.8
Australia 21.4 2.3 Norway 7.9 1.7
China, Taiwan 18.5 2.0 Italy 5.0 1.1
United Kingdom 11.1 1.2 Germany 4.6 1.0
Russia 9.7 1.0 Kuwait 4.2 0.9
Canada 8.4 0.9 S.Korea 3.6 0.8
Uae 7.8 0.8 Canada 3.0 0.7
Netherlands 6.1 0.7 Belgium 2.5 0.5
Spain 5.4 0.6 China, Mainland 2.1 0.5
Hong Kong 4.2 0.5 Spain 1.5 0.3
Israel 4.1 0.4 France 1.3 0.3
Malaysia 4.0 0.4 South Africa 1.1 0.3
Singapore 4.0 0.4 Malaysia 1.0 0.2
Sweden 3.6 0.4 Australia 0.8 0.2
Finland 3.1 0.3 Sudan 0.5 0.1
Greece 2.9 0.3 Sweden 0.4 0.1
Egypt 2.6 0.3 Ghana 0.3 0.1
Ukraine 2.5 0.3 Uganda 0.3 0.1
Mexico 1.9 0.2 Singapore 0.2 0.0
South Africa 1.8 0.2 Lebanon 0.2 0.0
Switzerland 1.4 0.1 Djibouti 0.2 0.0
Turkey 1.0 0.1 Kenya 0.1 0.0
Yemen 0.8 0.1 Thailand 0.1 0.0
Denmark 0.8 0.1 Nigeria 0.1 0.0
Kuwait 0.7 0.1 China, Taiwan 0.1 0.0
Lebanon 0.6 0.1 Hong Kong 0.0 0.0
Morocco 0.6 0.1 N.Korea, Pdrk 0.0 0.0
Norway 0.5 0.0 India 0.0 0.0
Rumania 0.3 0.0 Austria 0.0 0.0
Portugal 0.3 0.0 Tanzania 0.0 0.0
Kenya 0.2 0.0 Egypt 0.0 0.0
India 0.2 0.0 Switzerland 0.0 0.0
Djibouti 0.2 0.0 Zembabwe 0.0 0.0
Poland 0.1 0.0 Turkey 0.0 0.0
Bulgaria 0.1 0.0 Russia 0.0 0.0
N.Korea, Pdrk 0.0 0.0 Others 52.8 11.7
Slovakia 0.0 0.0 Total 451.7 100.0
Thailand 0.0 0.0
Hungary 0.0 0.0
Czech Republic 0.0 0.0
Austria 0.0 0.0
Nigeria 0.0 0.0
Brazil 0.0 0.0
Ireland 0.0 0.0
Zambia 0.0 0.0
Others 150.2 16.0
Total 936.0 100.0

*The commodity data differ slightly from aggregate trade data
88
Appendix 6B: TOP 10 Commodities-By Country
4. Chat 5. Oil Seed

Somalia 175.6 42.6 UAE 80.3 25.6
Djibouti 36.9 9.0 Israel 56.8 18.1
Belgium 6.3 1.5 Singapore 23.6 7.5
Germany 4.8 1.2 United States 18.2 5.8
United States 3.3 0.8 Turkey 13.0 4.2
Nigeria 3.3 0.8 China, Mainland 12.1 3.8
Israel 3.2 0.8 Japan 7.7 2.5
Kenya 1.9 0.5 Hong Kong 6.3 2.0
Japan 1.7 0.4 India 6.2 2.0
Saudi Arabia 1.5 0.4 Greece 3.4 1.1
Italy 1.1 0.3 S.Korea 3.1 1.0
S.Korea 1.0 0.2 Yemen 2.7 0.9
Australia 0.6 0.1 Germany 1.7 0.5
Netherlands 0.6 0.1 Netherlands 1.6 0.5
Spain 0.5 0.1 United Kingdom 1.2 0.4
Malaysia 0.5 0.1 Djibouti 1.0 0.3
Canada 0.4 0.1 Indonesia 0.9 0.3
United Kingdom 0.4 0.1 Saudi Arabia 0.9 0.3
France 0.4 0.1 Italy 0.9 0.3
China, Mainland 0.3 0.1 Pakistan 0.5 0.2
Sudan 0.3 0.1 Belgium 0.4 0.1
Morocco 0.1 0.0 Spain 0.4 0.1
China, Taiwan 0.1 0.0 Bulgaria 0.3 0.1
Russia 0.1 0.0 Canada 0.1 0.0
Greece 0.1 0.0 China, Taiwan 0.1 0.0
Thailand 0.1 0.0 France 0.1 0.0
Denmark 0.1 0.0 South Africa 0.1 0.0
South Africa 0.1 0.0 Lebanon 0.1 0.0
Uae 0.1 0.0 Malaysia 0.0 0.0
Mexico 0.1 0.0 Kuwait 0.0 0.0
Lebanon 0.1 0.0 Australia 0.0 0.0
Egypt 0.0 0.0 Switzerland 0.0 0.0
India 0.0 0.0 Ruwanda 0.0 0.0
Pakistan 0.0 0.0 Others 70.1 22.3
Ireland 0.0 0.0 Total 313.7 100.0
Sweden 0.0 0.0
Tanzania 0.0 0.0
Ghana 0.0 0.0
Switzerland 0.0 0.0
Norway 0.0 0.0
Austria 0.0 0.0
Others 166.1 40.3
Total 412.0 100.0
89
Appendix 6C: TOP 10 Commodities-By Country
6. Pulse 7. Textile and Garment 8. Electricity

India 56.5 26.1 United States 96.8 58.6 Sudan 55.5 61.3
Indonesia 26.1 12.1 Singapore 16.4 9.9 Djibouti 35.0 38.7
UAE 17.1 7.9 Germany 15.3 9.2 Others 0.0 0.0
Pakistan 9.0 4.1 Italy 6.0 3.6 Total 90.5 100.0
Turkey 7.0 3.2 Spain 3.6 2.2
Singapore 6.2 2.9 Canada 2.8 1.7 9. Meat and Meat Products
Yemen 4.7 2.2 Djibouti 2.0 1.2 UAE 38.1 50.4
Italy 4.6 2.1 China, Mainland 1.6 1.0 Saudi Arabia 26.7 35.3
China, Mainland 4.6 2.1 Uae 1.2 0.7 Hong Kong 0.5 0.7
Portugal 4.3 2.0 Kenya 1.1 0.7 Sudan 0.1 0.1
Belgium 3.4 1.6 Turkey 0.8 0.5 Germany 0.0 0.0
Russia 2.7 1.3 France 0.8 0.5 United Kingdom 0.0 0.0
South Africa 2.5 1.1 United Kingdom 0.7 0.4 Egypt 0.0 0.0
Germany 2.1 1.0 Israel 0.5 0.3 Lebanon 0.0 0.0
Sudan 2.0 0.9 Malaysia 0.4 0.3 United States 0.0 0.0
Bulgaria 2.0 0.9 S.Korea 0.3 0.2 Djibouti 0.0 0.0
Hong Kong 2.0 0.9 Netherlands 0.3 0.2 Others 10.2 13.5
United Kingdom 2.0 0.9 Egypt 0.2 0.1 Total 75.6 100.0
Morocco 1.8 0.8 Poland 0.2 0.1
Malaysia 1.8 0.8 Belgium 0.1 0.1
Kenya 1.4 0.7 Portugal 0.1 0.1 10. Vegetables
Egypt 1.2 0.5 Mexico 0.1 0.1 Somalia 23.3 49.4
Spain 1.1 0.5 Ghana 0.1 0.1 Djibouti 8.3 17.7
Djibouti 1.0 0.4 Pakistan 0.1 0.0 Netherlands 4.1 8.6
Israel 0.7 0.3 India 0.1 0.0 United Kingdom 1.6 3.4
Canada 0.6 0.3 Japan 0.1 0.0 Kenya 1.2 2.5
Thailand 0.5 0.2 Hungary 0.1 0.0 Germany 0.9 1.9
Hungary 0.4 0.2 Switzerland 0.1 0.0 Russia 0.8 1.8
Rumania 0.3 0.1 Finland 0.1 0.0 Spain 0.7 1.5
Netherlands 0.3 0.1 Sweden 0.0 0.0 Hong Kong 0.5 1.1
France 0.2 0.1 Australia 0.0 0.0 India 0.3 0.6
Japan 0.2 0.1 China, Taiwan 0.0 0.0 Turkey 0.1 0.2
Ukraine 0.2 0.1 Thailand 0.0 0.0 Canada 0.1 0.2
Czech Republic 0.2 0.1 Tanzania 0.0 0.0 Indonesia 0.1 0.2
Lebanon 0.2 0.1 Sudan 0.0 0.0 United States 0.0 0.1
United States 0.1 0.1 Austria 0.0 0.0 Yemen 0.0 0.1
Saudi Arabia 0.1 0.0 Norway 0.0 0.0 Norway 0.0 0.1
Switzerland 0.1 0.0 South Africa 0.0 0.0 Israel 0.0 0.1
Poland 0.0 0.0 Hong Kong 0.0 0.0 UAE 0.0 0.1
Somalia 0.0 0.0 Zambia 0.0 0.0 France 0.0 0.0
Norway 0.0 0.0 Denmark 0.0 0.0 South Africa 0.0 0.0
Australia 0.0 0.0 Czech Republic 0.0 0.0 Nigeria 0.0 0.0
Ruwanda 0.0 0.0 Ruwanda 0.0 0.0 Saudi Arabia 0.0 0.0
Others 45.2 20.9 Ireland 0.0 0.0 Switzerland 0.0 0.0
Total 216.4 100.0 Russia 0.0 0.0 China, Mainland 0.0 0.0
Indonesia 0.0 0.0 Australia 0.0 0.0
Uganda 0.0 0.0 Belgium 0.0 0.0
Others 13.2 8.0 Others 4.8 10.3
Total 165.1 100.0 Total 47.2 100.0
90
Appendix 7: TOP 10 Export Destination Countries--By Commodity (USD mn)
1. SWITZERLAND 4. SOMALIA 8. DJIBOUTI

Gold 672.0 Chat 175.6 Chat 36.9
Others 5.4 Vegetables 23.3 Electricity 35.0
Coffee 1.4 Live Animals 5.8 Vegetables 8.3
Food 0.2 Fruits 3.4 Others 3.4
Pulse 0.1 Others 2.5 Fruits 2.8
Textile and Garment 0.1 Food 0.2 Live Animals 2.7
Beverage 0.1 Spice 0.2 Textile and Garment 2.0
Spice 0.0 Animal Products 0.1 Oil Seed 1.0
Flour 0.0 Pulse 0.0 Pulse 1.0
Leather and Leather Products 0.0 Tea 0.0 Beverage 0.5
Vegetables 0.0 Leather and Leather Products 0.0 Food 0.4
Oil Seed 0.0 Total 211.2 Flower 0.2
Tea 0.0 Coffee 0.2
Chat 0.0 5. SAUDI ARABIA Spice 0.1
Flower 0.0 Coffee 132.5 Flour 0.0
Total 679.2 Flower 43.8 Leather and Leather Products 0.0
Meat and Meat Products 26.7 Cereals 0.0
2. NETHERLANDS Fruits 2.6 Meat and Meat Products 0.0
Flower 278.9 Chat 1.5 Total 94.6
Coffee 6.1 Oil Seed 0.9
Vegetables 4.1 Live Animals 0.4 9. BELGIUM
Oil Seed 1.6 Spice 0.3 Coffee 77.9
Others 0.7 Pulse 0.1 Chat 6.3
Chat 0.6 Flour 0.1 Pulse 3.4
Fruits 0.6 Food 0.1 Flower 2.5
Leather and Leather Products 0.5 Others 0.0 Oil Seed 0.4
Spice 0.3 Natural Gum 0.0 Textile and Garment 0.1
Pulse 0.3 Vegetables 0.0 Fruits 0.1
Textile and Garment 0.3 Natural Honey 0.0 Beverage 0.0
Flour 0.2 Total 209.0 Spice 0.0
Beverage 0.0 Others 0.0
Food 0.0 6. UAE Flour 0.0
Tea 0.0 Oil Seed 80.3 Food 0.0
Animal Products 0.0 Meat and Meat Products 38.1 Leather and Leather Products 0.0
Natural Gum 0.0 Pulse 17.1 Vegetables 0.0
Total 294.0 Flower 8.8 Total 90.8
Coffee 7.8
3. UNITED STATES Others 6.5 10. SUDAN
Coffee 127.9 Food 2.2 Electricity 55.5
Textile and Garment 96.8 Textile and Garment 1.2 Coffee 22.7
Oil Seed 18.2 Spice 0.9 Others 2.6
Flower 8.9 Fruits 0.9 Pulse 2.0
Leather and Leather Products 8.4 Flour 0.4 Live Animals 1.2
Food 4.7 Live Animals 0.1 Flower 0.5
Chat 3.3 Natural Gum 0.1 Chat 0.3
Flour 2.3 Chat 0.1 Spice 0.3
Others 1.9 Vegetables 0.0 Meat and Meat Products 0.1
Spice 1.7 Natural Honey 0.0 Beverage 0.0
Bees Wax 0.5 Total 164.6 Textile and Garment 0.0
Beverage 0.3 Natural Honey 0.0
Cereals 0.3 7. GERMANY Flour 0.0
Natural Gum 0.2 Coffee 97.3 Total 85.2
Fruits 0.1 Textile and Garment 15.3
Pulse 0.1 Others 5.0
Live Animals 0.1 Chat 4.8
Vegetables 0.0 Flower 4.6
Animal Products 0.0 Pulse 2.1
Tea 0.0 Oil Seed 1.7
Natural Honey 0.0 Vegetables 0.9
Meat and Meat Products 0.0 Bees Wax 0.6
Total 276.0 Leather and Leather Products 0.4
Natural Gum 0.3
Flour 0.3
Food 0.1
Spice 0.1
Meat and Meat Products 0.0
Beverage 0.0
Natural Honey 0.0
Animal Products 0.0
Cereals 0.0
Total 133.5
91
Appendix 8A: TOP 10 Imports by Product Category and by country
Petroleum Product Machin. & and Air Craft Metal & Metal Manf
UAE 677.3 36.8 China, Mainland 571.4 33.3 China, Mainland 503.4 42.5
Kuwait 465.1 25.3 United States 305.6 17.8 Turkey 161.8 13.7
Saudi Arabia 303.5 16.5 United Kingdom 207.4 12.1 India 144.2 12.2
Singapore 100.3 5.5 Italy 92.1 5.4 Ukraine 96.3 8.1
Egypt 81.4 4.4 Belgium 90.8 5.3 Italy 39.1 3.3
India 61.2 3.3 Germany 67.7 3.9 United States 33.6 2.8
United States 29.5 1.6 India 65.1 3.8 Russia 29.1 2.5
China, Mainland 14.7 0.8 Turkey 41.4 2.4 China, Taiwan 27.1 2.3
Turkey 13.8 0.7 S.Korea 38.7 2.3 UAE 22.8 1.9
Sudan 13.4 0.7 Japan 35.3 2.1 Spain 20.3 1.7
Thailand 4.6 0.2 Singapore 32.3 1.9 Canada 19.1 1.6
Hungary 3.9 0.2 Poland 22.0 1.3 S.Korea 19.0 1.6
France 2.2 0.1 France 12.9 0.8 Japan 14.7 1.2
Pakistan 1.7 0.1 Hong Kong 11.1 0.6 Germany 10.2 0.9
Israel 1.7 0.1 Brazil 10.8 0.6 Poland 4.2 0.4
Belgium 1.0 0.1 Sweden 10.6 0.6 Egypt 3.7 0.3
Italy 0.9 0.0 Canada 8.4 0.5 France 2.9 0.2
Kenya 0.8 0.0 UAE 7.6 0.4 N.Korea, Pdrk 2.4 0.2
S.Korea 0.5 0.0 Thailand 6.8 0.4 United Kingdom 2.1 0.2
Switzerland 0.3 0.0 Netherlands 6.5 0.4 Netherlands 2.0 0.2
Germany 0.1 0.0 Austria 6.2 0.4 Kenya 1.9 0.2
Japan 0.1 0.0 Spain 5.3 0.3 Switzerland 1.7 0.1
Poland 0.0 0.0 China, Taiwan 4.7 0.3 Hong Kong 1.6 0.1
United Kingdom 0.0 0.0 Israel 3.4 0.2 Brazil 1.6 0.1
Netherlands 0.0 0.0 Hungary 3.2 0.2 South Africa 1.4 0.1
Russia 0.0 0.0 South Africa 3.0 0.2 Belgium 1.2 0.1
Spain 0.0 0.0 Kenya 2.9 0.2 Thailand 1.1 0.1
Sweden 0.0 0.0 Mexico 2.9 0.2 Denmark 1.0 0.1
China, Taiwan 0.0 0.0 Australia 2.7 0.2 Pakistan 0.9 0.1
South Africa 0.0 0.0 Indonesia 2.6 0.1 Australia 0.8 0.1
Australia 0.0 0.0 Switzerland 2.5 0.1 Sweden 0.6 0.0
Others 61.2 3.3 Russia 2.3 0.1 Czech Republic 0.5 0.0
Total 1,839.3 100.0 Denmark 2.2 0.1 Saudi Arabia 0.5 0.0
Malaysia 2.0 0.1 Austria 0.5 0.0
Greece 1.9 0.1 Singapore 0.5 0.0
Czech Republic 1.5 0.1 Malaysia 0.5 0.0
Bulgaria 1.32 0.1 Portugal 0.5 0.0
Norway 1.31 0.1 Norway 0.4 0.0
Egypt 1.1 0.1 Israel 0.3 0.0
Saudi Arabia 0.6 0.0 Djibouti 0.3 0.0
Ireland 0.6 0.0 Finland 0.2 0.0
Pakistan 0.6 0.0 Uganda 0.2 0.0
N.Korea, Pdrk 0.4 0.0 Hungary 0.1 0.0
Ukraine 0.4 0.0 Greece 0.1 0.0
Finland 0.4 0.0 Zembabwe 0.1 0.0
Portugal 0.4 0.0 Bulgaria 0.1 0.0
Rumania 0.4 0.0 Indonesia 0.1 0.0
Sudan 0.1 0.0 Zambia 0.1 0.0
Slovakia 0.0 0.0 Rumania 0.1 0.0
Uganda 0.0 0.0 Slovakia 0.0 0.0
Zembabwe 0.0 0.0 Morocco 0.0 0.0
Lebanon 0.0 0.0 Mexico 0.0 0.0
Nigeria 0.0 0.0 Ireland 0.0 0.0
Morocco 0.0 0.0 Lebanon 0.0 0.0
Tanzania 0.0 0.0 Ghana 0.0 0.0
Ruwanda 0.0 0.0 Tanzania 0.0 0.0
Ghana 0.0 0.0 Sudan 0.0 0.0
Somali Land 0.0 0.0 Nigeria 0.0 0.0
Kuwait 0.0 0.0 Ruwanda 0.0 0.0
Djibouti 0.0 0.0 Kuwait 0.0 0.0
Zambia 0.0 0.0 Cyprus 0.0 0.0
Cyprus 0.0 0.0 Others 7.4 0.6
Others 13.4 0.8 Total 1,184.7 100.0
Total 1,714.73 100.0
Source: NBE and Cepheus Research compilation 92

*The commodity data differ slightly from aggregate trade data
Appendix 8B: TOP 10 Imports by Product Category and by country
Food and Live Animals Electrical Material Fertilizer

Ukraine 258.6 29.7 China, Mainland 503.2 68.6 India 192.3 41.8
United States 203.7 23.4 United States 41.2 5.6 Italy 64.4 14.0
Rumania 107.5 12.3 Italy 36.4 5.0 Switzerland 52.3 11.4
Russia 62.6 7.2 India 25.9 3.5 China, Mainland 39.1 8.5
Turkey 22.0 2.5 Turkey 16.6 2.3 France 16.2 3.5
India 20.7 2.4 United Kingdom 14.0 1.9 Germany 11.6 2.5
Bulgaria 20.7 2.4 France 13.6 1.9 Cyprus 10.9 2.4
Italy 20.2 2.3 Germany 10.7 1.5 Portugal 7.5 1.6
UAE 18.0 2.1 Japan 7.6 1.0 Turkey 6.7 1.5
Denmark 13.7 1.6 UAE 5.8 0.8 Netherlands 4.5 1.0
France 13.5 1.6 Canada 5.4 0.7 Denmark 4.4 1.0
Netherlands 12.7 1.5 China, Taiwan 5.1 0.7 S.Korea 3.7 0.8
China, Mainland 10.5 1.2 Spain 4.0 0.6 UAE 3.4 0.7
Sudan 10.0 1.2 South Africa 4.0 0.5 Malaysia 2.7 0.6
Egypt 8.3 1.0 S.Korea 3.8 0.5 Saudi Arabia 2.3 0.5
Kenya 7.4 0.8 Czech Republic 3.6 0.5 Kenya 2.3 0.5
Canada 6.6 0.8 Thailand 3.4 0.5 Spain 2.2 0.5
Saudi Arabia 3.6 0.4 Indonesia 2.8 0.4 Thailand 2.1 0.5
South Africa 2.6 0.3 Netherlands 2.6 0.4 Sweden 2.1 0.5
Malaysia 2.5 0.3 Malaysia 2.2 0.3 United Kingdom 2.0 0.4
Indonesia 1.9 0.2 Kenya 1.8 0.2 Egypt 1.7 0.4
Belgium 1.8 0.2 Poland 1.7 0.2 United States 1.6 0.4
Poland 1.8 0.2 Switzerland 1.7 0.2 Greece 1.3 0.3
Yemen 1.5 0.2 Belgium 1.1 0.2 Belgium 1.1 0.2
Brazil 1.4 0.2 Israel 1.0 0.1 Mexico 1.1 0.2
Uganda 1.2 0.1 Denmark 1.0 0.1 Poland 0.6 0.1
Germany 0.5 0.1 Rumania 1.0 0.1 Sudan 0.4 0.1
United Kingdom 0.5 0.1 Hong Kong 0.9 0.1 Ireland 0.3 0.1
Ghana 0.4 0.0 Mexico 0.9 0.1 Rumania 0.3 0.1
Hungary 0.4 0.0 Sweden 0.8 0.1 Canada 0.2 0.0
Spain 0.3 0.0 Brazil 0.8 0.1 Austria 0.1 0.0
Ireland 0.3 0.0 Saudi Arabia 0.6 0.1 N.Korea, Pdrk 0.0 0.0
Somali Land 0.3 0.0 Egypt 0.5 0.1 Australia 0.0 0.0
Lebanon 0.3 0.0 Hungary 0.5 0.1 Tanzania 0.0 0.0
Sweden 0.2 0.0 Greece 0.4 0.1 Bulgaria 0.0 0.0
Switzerland 0.1 0.0 Morocco 0.3 0.0 Japan 0.0 0.0
Pakistan 0.1 0.0 Austria 0.3 0.0 Zambia 0.0 0.0
N.Korea, Pdrk 0.1 0.0 Finland 0.2 0.0 South Africa 0.0 0.0
Thailand 0.1 0.0 Singapore 0.2 0.0 Slovakia 0.0 0.0
Israel 0.0 0.0 Bulgaria 0.2 0.0 Indonesia 0.0 0.0
Greece 0.0 0.0 Ghana 0.2 0.0 Czech Republic 0.0 0.0
Djibouti 0.0 0.0 Slovakia 0.1 0.0 Israel 0.0 0.0
Singapore 0.0 0.0 Pakistan 0.1 0.0 Others 18.6 4.1
Australia 0.0 0.0 Portugal 0.1 0.0 Total 460.3 100.0
Portugal 0.0 0.0 Australia 0.1 0.0
S.Korea 0.0 0.0 Ireland 0.1 0.0
Norway 0.0 0.0 N.Korea, Pdrk 0.1 0.0
Tanzania 0.0 0.0 Lebanon 0.0 0.0
China, Taiwan 0.0 0.0 Norway 0.0 0.0
Mexico 0.0 0.0 Russia 0.0 0.0
Japan 0.0 0.0 Zembabwe 0.0 0.0
Czech Republic 0.0 0.0 Ruwanda 0.0 0.0
Hong Kong 0.0 0.0 Sudan 0.0 0.0
Austria 0.0 0.0 Ukraine 0.0 0.0
Morocco 0.0 0.0 Tanzania 0.0 0.0
Finland 0.0 0.0 Somali Land 0.0 0.0
Nigeria 0.0 0.0 Uganda 0.0 0.0
Others 32.2 3.7 Nigeria 0.0 0.0
Total 871.2 100.0 Kuwait 0.0 0.0
Djibouti 0.0 0.0
Zambia 0.0 0.0
Others 4.7 0.6
Total 733.7 100
93
Appendix 8C: TOP 10 Imports by Product Category and by country
Grain Textiles Rubber Prod. Clothing

India 397.0 92.1 China, Mainland 209.6 71.7 China, Mainland 135.1 60.5 China, Mainland 146.8 83.2
South Africa 10.3 2.4 India 24.4 8.4 India 23.1 10.3 Turkey 8.5 4.8
S.Korea 8.8 2.0 Thailand 23.4 8.0 UAE 10.7 4.8 Pakistan 5.0 2.8
UAE 5.6 1.3 Turkey 9.5 3.3 Thailand 9.9 4.5 India 3.1 1.8
Germany 2.5 0.6 Indonesia 5.3 1.8 Japan 5.6 2.5 Thailand 2.2 1.3
Pakistan 1.7 0.4 UAE 3.8 1.3 Turkey 4.3 1.9 United States 1.3 0.8
United States 1.3 0.3 Pakistan 1.7 0.6 Italy 4.1 1.8 Indonesia 1.1 0.6
Malaysia 1.1 0.2 South Africa 1.6 0.5 Kenya 4.0 1.8 Canada 1.0 0.6
Egypt 0.8 0.2 Egypt 1.5 0.5 United States 3.9 1.7 UAE 0.7 0.4
Thailand 0.4 0.1 United Kingdom 1.5 0.5 Saudi Arabia 3.3 1.5 United Kingdom 0.7 0.4
Brazil 0.4 0.1 United States 1.4 0.5 Germany 2.4 1.1 Italy 0.5 0.3
Zambia 0.2 0.0 Italy 1.1 0.4 Pakistan 2.3 1.0 Saudi Arabia 0.4 0.2
China, Mainland 0.0 0.0 Saudi Arabia 0.8 0.3 S.Korea 2.0 0.9 Kenya 0.3 0.2
Saudi Arabia 0.0 0.0 Germany 0.6 0.2 Egypt 1.6 0.7 Belgium 0.3 0.2
Italy 0.0 0.0 Kenya 0.6 0.2 France 1.6 0.7 Australia 0.2 0.1
Morocco 0.0 0.0 China, Taiwan 0.5 0.2 Netherlands 1.4 0.6 Netherlands 0.2 0.1
United Kingdom 0.0 0.0 S.Korea 0.4 0.1 Indonesia 1.1 0.5 France 0.2 0.1
Nigeria 0.0 0.0 Belgium 0.3 0.1 Israel 0.8 0.4 S.Korea 0.2 0.1
Kenya 0.0 0.0 France 0.3 0.1 Belgium 0.7 0.3 Austria 0.2 0.1
Others 1.2 0.3 Israel 0.3 0.1 United Kingdom 0.6 0.3 Switzerland 0.1 0.1
Total 431.2 100.0 Netherlands 0.2 0.1 China, Taiwan 0.6 0.3 Singapore 0.1 0.1
Sudan 0.2 0.1 Greece 0.5 0.2 Germany 0.1 0.1
Switzerland 0.1 0.0 South Africa 0.4 0.2 Egypt 0.1 0.1
Australia 0.1 0.0 Switzerland 0.3 0.1 China, Taiwan 0.1 0.1
Tanzania 0.1 0.0 Malaysia 0.2 0.1 South Africa 0.1 0.0
Spain 0.1 0.0 Spain 0.2 0.1 Israel 0.1 0.0
Malaysia 0.1 0.0 Sweden 0.1 0.1 Portugal 0.1 0.0
Russia 0.1 0.0 Brazil 0.1 0.1 Morocco 0.0 0.0
Japan 0.1 0.0 Denmark 0.1 0.1 Hong Kong 0.0 0.0
Canada 0.0 0.0 Australia 0.1 0.1 Tanzania 0.0 0.0
Poland 0.0 0.0 Poland 0.1 0.1 Sweden 0.0 0.0
Lebanon 0.0 0.0 Mexico 0.1 0.0 Ireland 0.0 0.0
Ireland 0.0 0.0 Russia 0.1 0.0 Japan 0.0 0.0
Czech Republic 0.0 0.0 Hong Kong 0.1 0.0 Somali Land 0.0 0.0
Denmark 0.0 0.0 Morocco 0.1 0.0 Malaysia 0.0 0.0
Ghana 0.0 0.0 Canada 0.1 0.0 Ghana 0.0 0.0
Djibouti 0.0 0.0 Uganda 0.1 0.0 Bulgaria 0.0 0.0
Sweden 0.0 0.0 Czech Republic 0.0 0.0 Sudan 0.0 0.0
Hong Kong 0.0 0.0 Finland 0.0 0.0 Nigeria 0.0 0.0
Singapore 0.0 0.0 Austria 0.0 0.0 Poland 0.0 0.0
N.Korea, Pdrk 0.0 0.0 Hungary 0.0 0.0 Denmark 0.0 0.0
Uganda 0.0 0.0 Rumania 0.0 0.0 Czech Republic 0.0 0.0
Finland 0.0 0.0 Bulgaria 0.0 0.0 Hungary 0.0 0.0
Norway 0.0 0.0 Ireland 0.0 0.0 Spain 0.0 0.0
Portugal 0.0 0.0 Singapore 0.0 0.0 Greece 0.0 0.0
Brazil 0.0 0.0 Ukraine 0.0 0.0 Norway 0.0 0.0
Cyprus 0.0 0.0 Norway 0.0 0.0 Russia 0.0 0.0
Nigeria 0.0 0.0 Nigeria 0.0 0.0 Ukraine 0.0 0.0
Austria 0.0 0.0 Lebanon 0.0 0.0 Brazil 0.0 0.0
Greece 0.0 0.0 Portugal 0.0 0.0 Finland 0.0 0.0
Ruwanda 0.0 0.0 Slovakia 0.0 0.0 Lebanon 0.0 0.0
Ukraine 0.0 0.0 Tanzania 0.0 0.0 Djibouti 0.0 0.0
Hungary 0.0 0.0 Zembabwe 0.0 0.0 Mexico 0.0 0.0
Mexico 0.0 0.0 Ruwanda 0.0 0.0 Rumania 0.0 0.0
Kuwait 0.0 0.0 Kuwait 0.0 0.0 Uganda 0.0 0.0
Morocco 0.0 0.0 Somali Land 0.0 0.0 Slovakia 0.0 0.0
Slovakia 0.0 0.0 Ghana 0.0 0.0 Kuwait 0.0 0.0
Bulgaria 0.0 0.0 Cyprus 0.0 0.0 Ruwanda 0.0 0.0
Others 2.3 0.8 Djibouti 0.0 0.0 Others 2.5 1.4
Total 292.1 100.0 Others 1.3 0.6 Total 176.4 100.0
Total 223.2 100.0
94
Appendix 9: TOP 10 Import Origin Countries by Product
1. China, Mainland 5. Turkey

Machin. & and Air Craft 939.4 Metal & Metal Manf 161.8
Metal & Metal Manf 571.4 Machin. & and Air Craft 41.4
Electrical Material 503.4 Food and Live Animals 22.0
Textiles 503.2 Electrical Material 16.6
Clothing 209.6 Petroleum Product 13.8
Rubber Prod. 146.8 Textiles 9.5
Road & Motor Vehicles 135.1 Clothing 8.5
Glass & Glass Ware 53.6 Fertilizer 6.7
Chemicals 51.4 Rubber Prod. 4.3
Fertilizer 48.4 Chemicals 2.5
Petroleum Product 39.1 Soap & Polish 1.4
Paper & Paper Manf. 14.7 Road & Motor Vehicles 1.3
Food and Live Animals 10.6 Glass & Glass Ware 0.8
Telecomm. Apparatus 10.5 Beverages 0.7
Soap & Polish 9.7 Paper & Paper Manf. 0.7
Med. & Pharm. Prod 7.9 Telecomm. Apparatus 0.0
Beverages 7.5 Tobacco 0.0
Tobacco 6.1 Med. & Pharm. Prod 0.0
Grain 0.0 Others 463.5
Petroleum Crude 0.0 Total 755.6
Total 3,268.3
6. Malaysia
2. India Soap & Polish 15.8
Grain 397.0 Chemicals 3.8
Fertilizer 192.3 Fertilizer 2.7
Metal & Metal Manf 144.2 Food and Live Animals 2.5
Machin. & and Air Craft 65.1 Electrical Material 2.2
Petroleum Product 61.2 Machin. & and Air Craft 2.0
Med. & Pharm. Prod 35.2 Grain 1.1
Electrical Material 25.9 Metal & Metal Manf 0.5
Textiles 24.4 Rubber Prod. 0.2
Rubber Prod. 23.1 Glass & Glass Ware 0.1
Food and Live Animals 20.7 Textiles 0.1
Paper & Paper Manf. 15.4 Paper & Paper Manf. 0.1
Chemicals 12.0 Telecomm. Apparatus 0.1
Road & Motor Vehicles 9.9 Beverages 0.0
Soap & Polish 8.4 Road & Motor Vehicles 0.0
Glass & Glass Ware 3.4 Clothing 0.0
Clothing 3.1 Others 583.7
Beverages 0.6 Total 614.9
Telecomm. Apparatus 0.1
Others 723.2 7. Morocco
Total 1,765.3 Electrical Material 0.3
Rubber Prod. 0.1
3. United States Clothing 0.0
Machin. & and Air Craft 305.6 Metal & Metal Manf 0.0
Food and Live Animals 203.7 Machin. & and Air Craft 0.0
Electrical Material 41.2 Food and Live Animals 0.0
Metal & Metal Manf 33.6 Grain 0.0
Petroleum Product 29.5 Med. & Pharm. Prod 0.0
Paper & Paper Manf. 4.6 Glass & Glass Ware 0.0
Rubber Prod. 3.9 Textiles 0.0
Beverages 1.8 Soap & Polish 0.0
Fertilizer 1.6 Others 585.1
Textiles 1.4 Total 585.6
Clothing 1.3
Grain 1.3 8. Saudi Arabia
Road & Motor Vehicles 1.3 Petroleum Product 303.5
Telecomm. Apparatus 1.0 Food and Live Animals 3.6
Med. & Pharm. Prod 0.7 Rubber Prod. 3.3
Chemicals 0.6 Chemicals 2.9
Glass & Glass Ware 0.4 Fertilizer 2.3
Soap & Polish 0.3 Paper & Paper Manf. 1.5
Tobacco 0.1 Glass & Glass Ware 1.1
Others 326.7 Soap & Polish 0.8
Total 960.6 Textiles 0.8
Machin. & and Air Craft 0.6
4. UAE Electrical Material 0.6
Petroleum Product 677.3 Beverages 0.6
Metal & Metal Manf 22.8 Metal & Metal Manf 0.5
Food and Live Animals 18.0 Clothing 0.4
Rubber Prod. 10.7 Road & Motor Vehicles 0.0
Chemicals 8.4 Grain 0.0
Machin. & and Air Craft 7.6 Telecomm. Apparatus 0.0
Electrical Material 5.8 Med. & Pharm. Prod 0.0
Grain 5.6 Others 170.2
Textiles 3.8 Total 492.7
Paper & Paper Manf. 3.5
Fertilizer 3.4 9. Kuwait
Glass & Glass Ware 3.1 Petroleum Product 465.1
Beverages 1.7 Electrical Material 0.0
Soap & Polish 1.7 Machin. & and Air Craft 0.0
Telecomm. Apparatus 1.6 Rubber Prod. 0.0
Road & Motor Vehicles 0.9 Metal & Metal Manf 0.0
Clothing 0.7 Glass & Glass Ware 0.0
Petroleum Crude 0.2 Textiles 0.0
Tobacco 0.0 Clothing 0.0
Med. & Pharm. Prod 0.0 Others 0.3
Others 163.4 Total 465.4
Total 940.6
10. Ukraine
Food and Live Animals 258.6
Metal & Metal Manf 96.3
Machin. & and Air Craft 0.4
Road & Motor Vehicles 0.0
Electrical Material 0.0
Rubber Prod. 0.0
Clothing 0.0
Textiles 0.0
Glass & Glass Ware 0.0
Others 48.0
Total 403.4

95
Ethiopia: Key Macroeconomic Indicators: FY 2011-12 to FY 2021-22
FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Projection Projection
Real Sector: GDP, Prices, and Investment
Real GDP growth 8.7% 9.9% 10.3% 10.4% 8.0% 10.2% 7.7% 9.0% 6.1% 6.3% 1.0% 6.5%
Agriculture growth 4.9% 7.1% 5.4% 6.4% 2.3% 6.7% 3.5% 3.8% 4.3% 5.5% -6.4% 6.0%
Industry growth 19.7% 24.0% 17.1% 19.9% 20.5% 20.3% 12.2% 12.6% 9.6% 7.3% 4.0% 7.0%
Services growth 9.6% 9.0% 13.0% 11.1% 8.6% 7.2% 8.8% 11.0% 5.3% 6.3% 5.0% 6.5%
Inflation: CPI (period average) 34.1% 13.5% 8.1% 7.7% 9.7% 7.2% 13.1% 12.6% 19.9% 20.2% 31.3% 16.0%
Inflation: CPI (end-of-period) 20.7% 7.4% 8.5% 10.4% 7.5% 8.8% 14.7% 15.3% 21.6% 24.6% 24.0% 12.6%
Nominal GDP growth 45.1% 16.0% 22.4% 22.4% 20.8% 16.9% 20.0% 22.3% 25.4% 28.6% 32.7% 23.5%
Nominal GDP level (Birr billions) 747.3 866.9 1,060.8 1,298.0 1,568.1 1,832.8 2,200.1 2,690.8 3,374.7 4,341.4 5,759.1 7,114.3
Nominal GDP level (USD billions) $ 43.2 $ 47.6 $ 55.5 $ 64.5 $ 74.1 $ 81.6 $ 83.9 $ 95.7 $ 106.8 $ 110.3 $ 116.7 $ 122.9
GDP per capita (in USD) $ 516.4 $ 554.0 $ 631.1 $ 715.8 $ 803.9 $ 864.6 $ 869.3 $ 969.8 $ 1,059.5 $ 1,070.4 $ 1,110.0 $ 1,145.3
Exchange rate (Birr/USD, year-average) 17.28 18.23 19.11 20.13 21.16 22.47 26.23 28.12 31.59 39.38 49.34 57.88
Exchange rate (Birr/USD, end-period) 17.73 18.64 19.58 20.57 21.80 23.11 27.26 28.91 34.93 43.90 54.16 60.76
Exchange rate annual depreciation (year-average) 7.3% 5.5% 4.8% 5.3% 5.1% 6.2% 16.7% 7.2% 12.3% 24.7% 25.3% 17.3%
Investment-to-GDP ratio 34.6% 32.6% 38.0% 39.3% 37.3% 38.4% 34.2% 35.3% 30.6% 28.0% 27.0% 30.0%
By investor category:
Public sector investment-to-GDP ratio 26.1% 24.3% 17.0% 17.6% 16.8% 14.4% 12.6% 11.0% 10.0% 10.0% 11.0% 12.5%
Private sector investment-to-GDP ratio 8.5% 8.3% 21.0% 21.7% 20.5% 24.0% 21.6% 24.3% 20.6% 18.0% 16.0% 17.5%
By source of financing:
Domestic Savings-to-GDP ratio 16.5% 15.9% 20.5% 21.8% 22.4% 22.4% 24.1% 22.1% 20.8% 19.0% 17.5% 18.0%
External Savings-to-GDP ratio 18.1% 16.7% 17.5% 17.5% 14.9% 16.0% 10.1% 13.2% 9.8% 9.0% 9.5% 12.0%
Banking Sector FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23
Deposits at all commercial banks (Br bn) 189.3 237.8 292.9 366.5 436.7 567.7 729.1 899.1 1,042.8 1,361.3 1,606.3 2,007.9
Loans by all commercial banks (Br bn) 85.4 116.5 145.6 189.3 232.1 289.8 355.4 456.1 589.8 808.8 1,002.9 1,283.7
NBE Bills held by all comm banks (Br bn) 11.0 19.1 25.1 37.4 49.9 54.6 70.1 88.9 81.0 81.0 81.0 81.0
Treasury Bills held by all comm banks (Br bn) … … … … … … … … 9.5 47.5 96.0 112.0
Bonds held by all commercial banks (Br bn) 64.5 82.8 111.8 152.7 188.7 237.8 291.4 338.6 405.2 444.9 489.4 548.1
Total bank financing: Loans/Bills/Bonds (Br bn) 160.9 218.4 282.5 379.4 470.7 582.2 716.9 883.6 1,085.5 1,382.2 1,669.3 2,024.8
Deposit-to-GDP ratio (%) 25.3% 27.4% 27.6% 28.2% 27.8% 31.0% 33.1% 33.4% 30.9% 31.4% 27.9% 28.2%
Total bank financing-to-Deposit ratio (%) 85.0% 91.8% 96.5% 103.5% 107.8% 102.5% 98.3% 98.3% 104.1% 101.5% 103.9% 100.8%
Total commercial bank financing-to-GDP ratio (%) 21.5% 25.2% 26.6% 29.2% 30.0% 31.8% 32.6% 32.8% 31.9% 30.7% 27.3% 26.9%
Annual growth in bank deposits (%) 32.1% 25.6% 23.2% 25.1% 19.2% 30.0% 28.4% 23.3% 16.0% 30.5% 18.0% 25.0%
Annual growth in total bank financing (%) 49.0% 35.7% 29.4% 34.3% 24.1% 23.7% 23.1% 23.3% 22.8% 27.3% 20.8% 21.3%
Data Sources: NBE, MOFEC, CSA, and IMF; Cepheus Capital Research for projection years.
96
Ethiopia: Key Macroeconomic Indicators: FY 2010-11 to FY 2021-22
Fiscal Sector FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23
Revenue and grants (Birr bns) 115.7 137.2 158.1 199.6 243.7 269.1 287.6 344.9 395.0 316.9 395.9 510.1
Revenue (Birr bns) 102.9 124.1 146.2 186.6 230.7 256.6 269.6 311.3 354.3 304.7 380.9 460.9
Grants to budget (Birr bns) 12.8 13.1 11.9 13.0 13.0 12.5 17.9 33.6 40.7 12.2 15.0 49.2
Expenditure (Birr bns) 124.4 153.9 185.5 230.5 272.9 329.3 354.2 413.0 480.2 432.1 608.0 729.6
Fiscal balance after grants (Birr bns) -8.7 -16.7 -27.4 -30.9 -29.3 -60.2 -66.6 -68.1 -85.2 -115.2 -212.1 -219.5
External budget financing (Birr bns) 6.5 16.8 20.5 18.7 26.0 29.0 28.1 35.4 59.5 21.8 29.6 81.0
Domestic budget financing (Birr bns) 3.8 1.8 13.5 18.5 24.7 34.6 14.9 36.3 42.1 138.9 182.5 138.5
Other/exceptional financing (Birr bns) -1.6 -1.9 -6.6 -6.3 -21.5 -3.4 23.6 -3.6 -16.4 -45.5 0.0 0.0
Revenue and grants (% GDP) 15.5% 15.8% 14.9% 15.4% 15.5% 14.7% 13.1% 12.8% 11.7% 7.3% 6.9% 7.2%
Expenditure (% GDP) 16.6% 17.8% 17.5% 17.8% 17.4% 18.0% 16.1% 15.3% 14.2% 10.0% 10.6% 10.3%
Fiscal balance after grants (% GDP) -1.2% -1.9% -2.6% -2.4% -1.9% -3.3% -3.0% -2.5% -2.5% -2.7% -3.7% -3.1%
External budget financing (% GDP) 0.9% 1.9% 1.9% 1.4% 1.7% 1.6% 1.3% 1.3% 1.8% 0.5% 0.5% 1.1%
Domestic budget financing (% GDP) 0.5% 0.2% 1.3% 1.4% 1.6% 1.9% 0.7% 1.3% 1.2% 3.2% 3.2% 1.9%
Other/exceptional financing (% GDP) -0.2% -0.2% -0.6% -0.5% -1.4% -0.2% 1.1% -0.1% -0.5% -1.0% 0.0% 0.0%
Public Sector Debt (% GDP) 30.6% 41.9% 45.7% 52.9% 52.4% 55.2% 58.9% 56.2% 51.8% 50.5% 49.8% 49.3%
External Debt (% GDP) 20.6% 23.6% 25.2% 29.6% 29.0% 28.7% 30.8% 28.2% 27.0% 26.8% 25.0% 24.4%
Domestic Debt (% GDP) 10.1% 18.3% 20.5% 23.3% 23.4% 26.5% 28.1% 28.0% 24.7% 23.7% 24.8% 24.9%
External Sector: Balance of Payments FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23
Exports of goods (USD mn) 3,153 3,116 3,300 3,019 2,868 2,908 2,840 2,667 2,988 3,617 4,377 5,164
Exports of services (USD mns) 2,811 2,853 3,174 3,028 3,196 3,331 4,220 4,949 4,664 4,873 5,458 6,113
Imports of goods (USD mn) (11,018) (11,461) (13,712) (16,458) (16,725) (15,803) (15,253) (15,112) (13,881) (14,288) (16,288) (19,220)
Imports of services (USD mns) (2,639) (2,281) (2,461) (3,107) (3,442) (3,393) (3,983) (4,910) (4,245) (4,279) (4,365) (4,670)
Remittances (USD mn) 2,260 2,489 2,968 3,797 4,420 4,428 5,121 5,693 4,722 5,070 5,678 6,076
Private transfers (USD mn) 986 1,086 1,071 1,085 2,008 1,058 953 683 904 1,187 1,163 1,396
Foreign official grants (USD mn) 1,788 1,530 1,461 1,508 1,391 1,428 1,226 2,087 1,488 1,228 800 1,200
Current account balance (USD mn) (2,755) (2,781) (4,352) (7,401) (6,657) (6,528) (5,253) (4,534) (3,969) (3,146) (3,781) (4,595)
Current account balance (% GDP) -6.4% -5.8% -7.8% -11.5% -9.0% -8.0% -6.3% -4.7% -3.7% -2.9% -3.2% -3.7%
Foreign direct investment (USD mn) 1,072 1,232 1,467 2,202 3,269 4,171 3,723 3,015 2,419 3,971 2,900 4,700
Foreign borrowing, net: GOVT (USD mn) 938 1,270 2,309 3,352 1,628 1,402 1,632 1,158 1,947 896 476 1,276
Foreign borrowing, net: SOEs (USD mn) 231 882 332 2,347 1,052 626 937 1,326 (234) (874) (765) (465)
Overall External Balance (USD mn) (973) (7) (97) (521) (831) 659 (201) 58 (730) 340 (920) 1,266
Stock of Foreign Reserves, (USD mn) 2,262 2,368 2,496 3,249 3,402 3,197 2,843 3,415 3,209 2,881 1,961 3,227
Stock of Foreign Reserves, months imports 2.5 2.5 2.2 2.4 2.4 2.4 2.2 2.7 2.8 2.4 1.4 2.0
External Debt Stock (Public Sector, USD bn) 8.9 11.2 14.0 19.1 21.5 23.4 25.8 27.0 28.9 29.5 29.2 30.0
External Debt Stock (Public Sector, % GDP) 20.6% 23.6% 25.2% 29.6% 29.0% 28.7% 30.8% 28.2% 27.0% 26.8% 25.0% 24.4%
Growth of Goods Exports 14.8% -1.2% 5.9% -8.5% -5.0% 1.4% -2.3% -6.1% 12.0% 21.1% 21.0% 18.0%
Growth of Goods Imports 33.5% 4.0% 19.6% 20.0% 1.6% -5.5% -3.5% -0.9% -8.1% 2.9% 14.0% 18.0%
Data Sources: NBE, MOPD, CSA, and IMF; Cepheus Capital Research for estimates and projection years.
97

Ethiopia Macroeconomic Handbook 2022

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Ethiopia

Macroeconomic Handbook 2022

RESEARCH & ANALYTICS

3. Money and Inflation: What is happening to money supply and inflation?

Future Prospects and Outlook

Future Prospects and Outlook

Section 1: Growth and Recent Economic Activity

GDP Data: Part 1

Real GDP Growth--Ethiopia Real GDP Growth--SSA Agriculture Industry Services

Source:MoPD, WB Source:NBE, MoPD

Figure 1.1C: Demand Side Real Growth (%)

Demand Side Growth

40.0% 45.1% 36.4%

30.0% 27.0% 26.2%

Private consumption Investment

GDP Data: Part 2

Figure 1.2A: Investment (% of GDP)

Figure 1.2B: Private consumption (% of GDP)

Private consumption(% of GDP)

GDP Data: Part 3

Sectors 2016-17 2017-18 2018-19 2019-20 2020-21 Five-Yr Avg

Ranked by share in GDP in 2020-21

Sectors 2016-17 2017-18 2018-19 2019-20 2020-21 FIve-Yr Change

1 Crop sector 23.5% 22.8% 21.5% 21.3% 21.1% -2.4%

High Frequency Indicators Data, Part 1: FY 2020-21 Outturns

Foreign investment 64.1%

Credit to Government 56.3%

Crop output (CSA) 2.0%

Industrial Parks' Production -2.2%

Cement production -4.5%

Capital goods imports -5.9%

NBE reserves -23.2%

External loans -57.1%

-80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0%

2020-21 FISCAL YEAR OUTTURNS

Nominal Growth Rates Real Growth Rates

Simple average of the 25 HFIs growth last FY: 1.5%

Weighted average (approximate) of HFIs growth last FY: 4.2% Weights

GDP deflator: 21.8%

High Frequency Indicators Data: Part 3, Latest Year-to-Date Outturns

Figure 1.5A High Frequency Indicators, Year-to Date Growth in FY 2021-22

Current Fiscal Year: Nominal Growth Rates for Year-to-Date Outturns

Tourist inflows 156%

Banks' profits 88%

Money suppl y (M2) 28%

Credit to Construction/Housing 23%

Industrial Parks Production 20%

Government Revenue 17%

Cement pr oduction -13%

Capital g oods im ports -28%

NBE reserves -34%

External loans -69%

ECX traded crop volum es -75%

-100% -50% 0% 50% 100% 150% 200%

Year-to-Date Figures for CURRENT FISCAL YEAR (2021-22)

Nominal Growth Rates Real Growth Rates

High Frequency Indicators Data: Part 4, Areas of Strength

Monthly Industrial Parks Export Value of Exports

Quarterly Revenue FDI (USD mns)

2019-20 QI 2019-20 2019-20 2019-20 2020-21 QI 2020-21 2020-21 2020-21

QII QII I Q4 QII QII I QIV

Source: ERCA Source: NBE, EIC

High Frequency Indicators Data: Part 3, Areas of Weakness

Figure 1.7A: Capital Goods Import Growth Rate (%)