Ethiopia has launched the Second African Forum on Sovereign Finance in Addis Ababa, bringing together policymakers, financial experts and investors to tackle growing debt vulnerabilities and shrinking fiscal space across the continent.
The three-day Forum, themed “Enhancing Fiscal Space and Debt Sustainability”, has attracted representatives from Finance ministries, debt management offices, multilateral institutions, credit rating Agencies and institutional investors.
The event is jointly organized by United Nations Economic Commission for Africa. Opening the forum, Semereta Sewasew warned that repeated global shocks have intensified fiscal pressures across African economies. She said weakening external financial buffers and declining foreign exchange reserves relative to debt levels have heightened concerns about debt sustainability across the continent.
“Debt management is no longer a technical function at the margins of government, it is now central to macroeconomic stability, development strategy and policy credibility”, she stated. Semereta noted that the COVID-19 pandemic and geopolitical conflicts have transformed Africa’s sovereign financing environment, leading to higher borrowing costs, increased exchange rate pressures and weaker fiscal buffers.
She highlighted Ethiopia’s ongoing economic reforms following approval of its International Monetary Fund programme in July 2024, citing progress in exchange rate liberalization, domestic revenue mobilization and fiscal transparency. According to her, the reforms have contributed to moderating inflation, expanding exports, rebuilding reserves and improving fiscal space, while maintaining strong economic growth.
She added that Ethiopia secured $3.5 billion in debt relief under the G20 Common Framework and called for coordinated efforts to lower borrowing costs, deepen domestic capital markets and expand concessional financing.
Claver Gatete described the forum as an important platform for urgent economic reforms. He warned that slowing growth, tighter financial conditions and persistent global uncertainty are limiting policy choices and increasing the cost of capital for African economies.
Despite the challenges, Gatete said economic growth in sub-Saharan Africa is projected to rise from 3.5% this year to 4% next year, although mounting debt burdens continue to threaten progress. Meanwhile, Mark Napier stressed the need to link sovereign debt discussions with climate finance and capital market reforms. He said climate financing, sovereign debt management and domestic market reforms are interconnected issues that should be addressed together, particularly ahead of COP32.
Delegates are expected to conclude the Forum with proposals aimed at unlocking private investment and expanding fiscal space to support sustainable development across Africa.