Voltage stability assessments, made so far on the Ethiopian electric power system (EEP), are limited both in number and in methodology. Here, in this paper the static voltage stability of the Ethiopian power system is investigated using an index called normalized active power margin. The methodology starts from determining Thevenin equivalent of a system as viewed from the load buses. The Thevenin equivalent parameters help to determine the load bus maximum active power transfer limit and to draw the PV relation curves. The approach avoids the time-consuming method of PV curve based maximum active power transfer determination, which requires large number of power flow computations. The resulting maximum active power transfer and current operating active power load are used for the index calculation. The index is tested using IEEE 30 bus system and produced results matching with other previously established indices. The index is capable of ranking vulnerability of load buses to voltage instability. Then, scenarios of heavy load and light load EEP cases, with and without system reactive power compensation, are investigated. Results reveal weakest buses are supplied from 66kV transmission lines, load bus 232 being the weakest of all. On the other hand, the most stable buses are supplied from 132 kV transmission lines, bus 149 being the most stable bus. PV curves drawn, also, reveal the improvement that come with reactive power compensation and with operating in light load condition.