11 August, 2025
Eyob Yohannes
In 2018, as Ethiopia entered a new chapter with the rise of Prime Minister Abiy Ahmed, he made a striking remark: “A poor country has no sovereignty.” At the time, many dismissed it as a throwaway line. But in hindsight, it was more revealing than we realized. It wasn’t just an observation—it was a warning.
By 2017, Ethiopia was sliding into a debt crisis. Foreign currency reserves were dwindling. Major infrastructure projects were stalling. Government salaries were struggling to keep pace with inflation.
These weren’t just internal setbacks—they signaled that the country had exceeded the limits of its economic sovereignty.
At the same time, pressure from international financial institutions began to mount. To qualify for debt relief or new funding, Ethiopia was told it had to “reform”. And by reform, they meant implement neoliberal structural adjustments: Devalue the birr, float the exchange rate, slash public spending, eliminate subsidies, privatize state enterprises, and boost domestic tax collection.
But let’s be clear: This isn’t about conspiracy—it’s about economic leverage. Despite any good intentions, Ethiopia’s government has limited autonomy. Much of its policy space is defined by what international creditors demand in exchange for survival.
This is simply how the global economic system works. Countries that borrow heavily must accept policy terms set by their creditors. In Ethiopia’s case, this has meant implementing austerity measures that have often deepened public hardship while keeping foreign lenders satisfied.
The 2019 IMF loan and debt restructuring—worth nearly $3 billion—came with strings attached, including strict austerity measures: Devaluing the birr, slashing fuel and electricity subsidies, and privatizing state-owned enterprises.
The deal also required Ethiopia to tighten monetary policy, limit borrowing by state firms, and prioritize debt repayment over social spending—policies that eroded economic sovereignty while fueling inflation and public discontent.
In July 2024, the IMF approved a new four-year $3.4 billion Extended Credit Facility, but the government’s compliance came at a brutal cost. Fuel and electricity subsidies were abruptly axed, the birr was devalued past the point of stability, and, overnight, living expenses spiraled beyond reach. The consequences? A population pushed to the brink, simmering with rage as their economic foundations crumbled.
So once again, we must ask: Who truly holds power in Ethiopia today?
The cost of living in Ethiopia is unbearable. There is no functional middle class anymore—only those who scrape by and those with access to foreign currency. Public servants, once the backbone of national stability, can barely feed their families. Healthcare is collapsing. Education is underfunded. And instead of relief, the people are met with higher taxes, new fees, and lectures about national sacrifice.
This isn’t governance. It’s economic surrender dressed up as reform.
Meanwhile, a government boxed in by debt and international lenders clings to the IMF’s blueprint as if it’s the only way forward. But this path wasn’t designed for Ethiopia’s complex socio-political fabric—it was designed for one purpose: Debt repayment. Period.
Abiy’s 2018 comment— ”a poor country has no sovereignty”—is less a slogan than a bitter truth. One he may have come to understand more deeply over time.
Read more....
https://www.ethiopia-insight.com/2025/0 ... e-strings/
