Financial Balances and the Development of the Ethiopian Economy

To explore the interrelationships between government fiscal decisions, external trade, and the savings and investment decisions of domestic firms and individuals, this chapter constructs a consistent set of financial balances between the private sector, the public sector, and the balance of payments on current account. While naturally arising out of national accounts data, the financial balances are not routinely available for Ethiopia. This chapter introduces new estimates and uses them to assess the public-sector-led investment in infrastructure and high growth rate achieved over the past decade, the prospects for sustained growth, and the implications for Ethiopia’s debt profile over the coming decade.