Ethiopia Reopens Eurobond Restructuring Talks Amid Debt Concerns
Ethiopia is set to revisit discussions concerning the restructuring of its $1 billion Eurobond, as announced by the country’s Ministry of Finance. This decision follows a recent review by the Official Creditor Committee (OCC), which assessed a preliminary agreement reached with private investors for the Eurobond’s restructure.
Evaluating Debt Relief Agreements
The OCC’s assessment revealed significant shortcomings in the draft restructuring deal, particularly concerning the comparability of treatment principle. This principle mandates that all creditor groups share the burden of debt relief equitably. The preliminary deal did not fulfill this requirement, prompting Ethiopia to reconsider its approach to the restructuring process.
Initially, Addis Ababa had announced an agreement in principle for the terms of the Eurobond restructuring, which is due to mature in 2024. However, to proceed with any such deal, approval from bilateral lenders represented in the OCC is necessary.
Potential Risks to Economic Stability
Following the committee’s evaluation, Ethiopian officials stated they would not be able to move forward with the restructuring terms previously discussed. The government emphasized that continuing under these circumstances poses risks to the country’s macroeconomic stability and its broader economic recovery efforts.
Context of the Debt Restructure
Ethiopia first sought assistance in restructuring its external debt back in 2021 through the G20 Common Framework, well before the country defaulted on its Eurobond payments in December 2023. The Ethiopian government has been seeking backing from the International Monetary Fund (IMF) as part of its debt negotiations, but these discussions hinge on firm commitments from development partners and financing assurances from creditors.
Progress in the debt relief process has been sluggish, partly due to ongoing conflict that erupted in November 2020 between the central government and Tigray rebel forces.
Recent Developments in Debt Restructuring
In July 2025, Ethiopia successfully reached an agreement with official creditors to restructure a substantial $8.4 billion in debt. This agreement is expected to free up more than $3.5 billion in cash flow, which can be redirected toward crucial public investments, fostering economic development.
Despite these developments, the IMF has indicated that Ethiopia’s debt situation remains unsustainable. This is primarily due to ongoing breaches of export-related external debt indicators and limited debt-carrying capacity the country possesses. The IMF has expressed that obtaining effective debt treatment is essential for addressing Ethiopia’s financing needs.
Ethiopia’s path forward will depend heavily on the outcome of the ongoing discussions regarding the Eurobond restructuring, as well as its ability to navigate the broader challenges in its fiscal and economic landscape.
For further insights on this evolving situation, you can visit the IMF on Debt Relief for comprehensive information.
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