Ethiopia faces economic challenges, recently marked as in “restricted default” by Fitch after failing to pay a Eurobond redemption installment. The country is negotiating an aid package with the IMF to address its economic issues. Joining the BRICS alliance brought hope, with Finance Minister Ahmed Shide emphasizing the importance of cooperation with both traditional and new partners.
Ethiopia’s BRICS membership surprised analysts, but its geopolitical significance due to a large population and economic growth potential played a decisive role. Economic problems, including heavy foreign debt, currency shortages, inflation, and the aftermath of the Tigray conflict, contribute to Ethiopia’s precarious situation. The Tigray war has altered the West’s perception of Prime Minister Abiy Ahmed, and a changing global landscape further complicates matters.
The Tigray conflict has left significant destruction, with a looming famine threatening the region. New geopolitical tensions arose as Ethiopia announced gaining access to the port of Berbera through a pact with the autonomous Somali region of Somaliland. Somalia rejected the deal, creating potential conflicts in the region.
Ethiopia’s push for ocean access is seen as an economic strategy to revive trade, attract partnerships, and investments. Joining the BRICS could provide financial support, especially through the New Development Bank (NDB), established to counter Western dominance. While the NDB could offer alternative financing, it is not fully functional yet. Experts suggest that reliance on the NDB might free Ethiopia from meeting Western-imposed conditions for IMF credit.
Seife Tadelle Kidane from the University of Johannesburg sees potential in the NDB for promoting growth and stability through infrastructure development. However, he emphasizes the need for Ethiopia to remain flexible, recognizing the self-interest of countries in international politics and economics. Overall, Ethiopia’s engagement with the BRICS and pursuit of economic revitalization through diverse partnerships will play a crucial role in its recovery.
Read this report from DW for more.
