Ethiopia has reached an agreement in principle with its official bilateral creditors on an interim debt-service suspension and will start talks to restructure a $1 billion Eurobond maturing next year, its finance ministry said on Wednesday.
Ethiopia’s economy is under pressure from double-digit inflation, hard-currency shortages and growing debt repayments, a year after the federal government and forces from the rebellious northern Tigray region signed a truce to end a two-year civil war.
The East African country requested the debt-service suspension while carrying out programme discussions with the International Monetary Fund (IMF) and holding debt restructuring negotiations with official bilateral creditors under the G20’s Common Framework, the finance ministry said in a statement.
“The agreed interim debt-service suspension aims at … providing the country with appropriate breathing space for the period 2023 and 2024. The redemption terms for the suspended amount will maximise debt-service relief during the prospective IMF programme years while avoiding a bunching of maturities after the programme.”
Ethiopia had more than $28 billion of external debt at the end of March.
Between 2006 and 2022, Chinese lenders committed to more than $14 billion of loans to Ethiopia, according to Boston University.
Ethiopia’s 2024 Eurobond had fallen more than 1 cent on the dollar to just over 61 cents by 0840 GMT .