Ethiopia’s official creditors have agreed to grant the country more time to repay $8.4 billion in debt, halting just short of a full write-down.
The East African nation defaulted in December 2023 and reached a preliminary restructuring agreement in March, seen as crucial to exiting sovereign default.
The deal provides Ethiopia with $2.5 billion in debt service relief during its International Monetary Fund (IMF) programme, which runs until 2028.
William Roos, co-chair of the Official Creditor Committee (OCC), said the approach reduces the debt burden without canceling principal amounts.
Instead, Ethiopia’s obligations will be eased through extended maturities, reduced payments, and lower interest rates throughout the IMF programme.
This structure cuts the debt in “net present value” terms—lowering its true cost over time—despite the absence of a direct haircut.
Ethiopia is restructuring under the G20’s Common Framework, designed to expedite debt treatment for low-income countries.
However, a standoff continues with holders of Ethiopia’s $1 billion Eurobond, who have rejected an 18% haircut, insisting the country only faces short-term liquidity issues.
Bondholders criticized the IMF’s solvency assessment, claiming it undervalued Ethiopia’s gold and coffee exports to exaggerate financial stress.
Roos countered that the IMF’s projections remain the foundation for the current rescue plan and that Ethiopia’s problems are deeper than cash flow shortages.
He noted that, compared to Zambia and Ghana, Ethiopia has stronger payment capacity during the IMF programme period.
Though some bondholders raised concerns over transparency, Roos confirmed open lines of communication and future dialogue possibilities.
He emphasized the positive cooperation between OCC co-chairs France and China, calling their joint negotiations with Ethiopia “very constructive.”