Moody’s warns Ethiopia election row could affect investments

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Charles Gitonga BBC News

The Tigray regional election went ahead despite the prime minister postponing it because of coronavirus

A dispute surrounding the postponement of national elections in Ethiopia may pose a risk to investment decisions in the country according to analysts at credit ratings agency Moody’s.

Last week, the northern region of Tigray went to polls despite a postponement by the federal government, attracting criticism from Prime Minister Abiy Ahmed who has termed the exercise “unconstitutional”.

Moody’s downgraded Ethiopia’s rating – which is a marker of how likely it is to pay back its debts – from B1 to B2 in May mainly due to its exposure to external public sector debt compared to foreign exchange receipts.

Credit ratings agencies grade countries and institutions by their credit-worthiness. That in turn can affect the amount that it costs countries to borrow money.

Ethiopia is on the International Monetary Fund’s list of fastest growing economies in Africa after years of accelerated foreign investment in the nation’s infrastructure projects.