The government of Ethiopia has introduced a new strategy to rescue highly indebted public enterprises, which borrowed a total of more than 945 billion birr from local and foreign lenders.
The state owned enterprises are not in a position to repay the debt including the 525 billion birr they borrowed from the Commercial Bank of Ethiopia; Minister of Finance Ahmed told local media on Tuesday.
According to the minister, the government’s new strategy aims at rescuing both the borrower and the bank from insolvency and seeks to ease the government’s total debt burden amounting to $54.7 billion from local and foreign sources.
The Council of Ministers on Tuesday approved the new strategy to be implemented by what is called Public Enterprises Liability and Asset Management Company.The company is bestowed with a responsibility to encourage the public enterprises to restructure their debt and re-emerge from bankruptcy in better shape than before they went bust.
Ethiopian Electric Power, Ethiopian Railway Corporation, Ethiopian Sugar Corporation, Metals and Engineering Corporation, Ethiopian Chemical Corporation and the Ethiopian Electric Utility are some of the highly indebted public enterprises in Ethiopia.
As per the decision made by the Council of Ministers’, the new company will acquire a significant portion of the fund which will be secured from partial privatization of Ethio-telecom as operating capital to rescue the public enterprises and the Commercial Bank of Ethiopia from insolvency.
According to information released by Ethiopia’s Ministry of Finance, the government is indebted to a total of $54.7 billion. Of which $28.99 billion or 1.06 trillion Ethiopian birr was obtained from foreign lenders. The local debt owed by the government from local lenders surpassed 945 billion birr, according to the Ministry of Finance.
