Ethiopia’s lower house, House of Peoples’ Representative, ratified 3 loans which will be used to finance 2 road construction projects in Addis Ababa and upgrading an electric grid system in the capital city. The move was done 2 weeks after MPs asked Budget and Finance Affairs Standing Committee to assess the nation’s debt repayment capacity. Before the loans were approved, the Committee explained to members of the house the loans will not burden the country and that the country has the capacity to repay the loans.
Out of the 3 loans secured from the Export-Import Bank of China (EXIM Bank of China), 1 is going to be used for financing the upgrade of electric grid system installation project in Ethiopia’s capital. The loan secured for this project was 230 million USD.
The other 2 loan agreements ratified were for the construction of 2 roads which will cost 102 million USD and 50 million USD respectively.
The loan which amounts 102.7 million USD, will be used to finance the Kality Ring Road Interchange and a 50 meter wide road towards Tulu Dimtu Roundabout and the one from Kality Ring Road to Bulbula up to Kilinto Roundabout.
It was back in July 2016 that 1 of the loan agreements was signed between Ministry of Finance and Economic Cooperation of Ethiopia (MOFEC) and the EXIM bank. One of the agreements stipulates an interest rate of 2 percent interest per year, 0.25 percent management fee and another 0.25 percent commitment fee. The loan is expected to be entirely paid within 20 years, including a 7 seven years grace period.
MOFEC signed the other loan agreement in October 2016 for the extension of 102.7 million USD loan.