Ethiopia’s new debt-service suspension to mirror China deal — finance ministry
Addis Ababa — An agreement being finalised with Ethiopia’s official bilateral creditors is expected to largely mirror a previous deal with China that suspended debt payments for the fiscal year ending next July, a senior finance ministry official said on Thursday.
Eyob Tekalign, State Minister of Fiscal Policy and Public Finance, also said in an interview that the government was reaching out to holders of a Eurobond maturing in December 2024 to set up meetings about a restructuring.
Ethiopia, Africa’s second most populous nation with about 120 million people, has drawn strong investor interest since Prime Minister Abiy Ahmed came to power in 2018 promising to liberalise a tightlycontrolled economy.
But it has been saddled by double-digit inflation, hard currency shortages, growing debt repayments and conflicts in several regions.
The finance ministry announced on Wednesday that Ethiopia had reached an agreement in principle with its official bilateral creditors on an interim debt-service suspension, after striking a deal in August with China.
“With China ... we have a two-year debt suspension,” said Eyob. “So essentially the creditors committee has put forward the same proposal for all our other creditors - largely similar terms. Some could be more favourable.”
“The idea is to give us enough space until we work out the full restructuring under the G20 framework,” he said, referring to a process set up by G20 countries in response to the Covid-19 pandemic. Ethiopia first requested a restructuring under the G20 Common Framework in 2021. It had more than $28 billion of external debt at the end of March this year. —