Ethiopia is set to reduce its debt repayments by $4.9 billion as it finalizes its debt restructuring, State Finance Minister Eyob Tekalign announced Friday. The move follows the country’s recent agreement with the International Monetary Fund (IMF) for a new financing program.
The debt overhaul will involve negotiations with individual creditors over the coming months, with expected savings including $200 million from restructuring a $1 billion Eurobond. This process aims to adjust the bond’s nominal value.
Prime Minister Abiy Ahmed also addressed recent economic reforms, including the switch to a market-determined foreign exchange rate. The Ethiopian birr, which floated freely starting Monday, has depreciated by 31.5% against the dollar, causing concern over potential inflation.
Abiy emphasized that the adjustment aimed to unify disparate exchange rates rather than devalue the currency. Meanwhile, the federal trade ministry has closed over 700 shops for unjustified price hikes, as part of efforts to control inflation.
The reforms, which also include lifting foreign exchange restrictions, are expected to encourage private sector growth and enhance long-term economic stability, despite concerns from some local governments about the impact on low-income households.