Ethiopia's Rocky Beginnings in BRICS: A Crypto Perspective

• The Expansion of the BRICS Alliance
• Introduction
• BRICS and the Monetary Challenge
• Ethiopia's Financial Struggle and BRICS
• Ethiopia's Default on Eurobond Loan
• The Way Forward for Ethiopia
• BRICS Members' Economic Stability
• Economic Status of BRICS Members

The Expansion of the BRICS Alliance

Introduction

In August 2023, during the 15th summit held in Johannesburg, the BRICS alliance extended invitations to six new countries to join their bloc. Interestingly, Argentina, under the leadership of newly-elected President Javier Milei, was the only one to decline the invitation. While some speculated about the reasons behind Argentina's decision, the United Arab Emirates, Egypt, Iran, and Ethiopia accepted the invitations and are now part of the BRICS grouping. News about Saudi Arabia's potential membership in the alliance has been met with mixed reports.

BRICS and the Monetary Challenge

Beyond the expansion of the alliance, there have been discussions regarding the launch of a BRICS currency to rival the US dollar. This proposed currency could shift the global financial landscape and give the BRICS countries more financial autonomy.

Ethiopia's Financial Struggle and BRICS

Ethiopia's Default on Eurobond Loan

Despite the promising developments, the newly-inducted BRICS member, Ethiopia, is struggling financially. Recently, Ethiopia defaulted on a Eurobond loan installment. Fitch, a US-based rating agency, downgraded Ethiopia to restricted default just days before the New Year. The Ethiopian government is now negotiating an aid package with the International Monetary Fund (IMF) to manage its financial obligations.

The Way Forward for Ethiopia

Ethiopia envisages the aid package as an opportunity to revive its ailing economy and set the country on a recovery path. This assistance will not just be beneficial for Ethiopia, but could also bring stability to Africa in general. Finance Minister Ahmed Shide has stated that this move is a significant positive amidst the financial crisis. Shide emphasized that Ethiopia would maintain cooperation with its traditional partners while enhancing its relationship with new ones, including the rapidly growing economies of the BRICS countries.

BRICS Members' Economic Stability

Economic Status of BRICS Members

Most of the BRICS members, both the old and the new, enjoy financial stability, excluding Ethiopia. However, Susanne Stollreiter, Head of the Friedrich Ebert Foundation (FES) in Addis Ababa, expressed confidence that Ethiopia would grow within the BRICS alliance. She highlighted Ethiopia's potential for strong economic growth due to its large population size and its significant geopolitical position.

Edited by Jonathan Stoker