During the third Belt and Road Forum for International Cooperation in Beijing, Ethiopia’s Prime Minister, Abiy Ahmed, engaged in discussions with China’s Premier, Li Qiang. Li expressed China’s readiness to collaborate with Ethiopia, aiming to support each other in maintaining internal stability and achieving development and revitalization. He also expressed China’s willingness to enhance their economic and trade cooperation with Addis Ababa, aligning the interests of both nations more closely.
Abiy Ahmed, in response, characterized China as ‘one of Ethiopia’s most dependable partners and friend, expressing gratitude for Beijing’s enduring support in his country’s economic and social progress’. He further indicated Ethiopia’s active participation in the Belt and Road Initiative (BRI) and a deepening of cooperation in various sectors, including industry and agriculture.
According to a Xinua news report, Li Qiang, emphasized China’s readiness to partner with Ethiopia in steadfastly bolstering each other’s efforts in upholding domestic stability, fostering development, and achieving revitalization.
Following their discussions, Li and Ahmed oversaw the signing of 14 new bilateral cooperation agreements, including those pertaining to the Belt and Road Initiative, Global Development Initiative, agriculture, culture, health, digital economy, green development, and urban and infrastructure construction. China recently extended a debt relief to Ethiopia, which has been in long talks with the IMF to restructure its debt and receive reconstruction financing. Annalisa Fedelino, speaking to reporters at the IMF’s annual meetings in Marrakech, Morocco, noted that “the Chinese authorities have already extended debt relief to Ethiopia”, and mentioned that they are currently pursuing a similar arrangement with other creditors. She found this development to be highly positive and promising sign.
Ethiopia’s external debt stood at $28.2 billion or approximately 25% of its total GDP by the end of March. This figure encompasses a $1 billion Eurobond set to mature in December 2024. The country faces a coupon payment of $32 million on this bond this December. Over the period spanning from 2006 to 2022, Chinese lenders made commitments exceeding $14 billion in loans to this landlocked nation, as reported by Boston.
Ethiopia has expressed its desire to move to a market-based exchange rate for its currency, which is currently trading at about 100 Birr per one U.S dollar, compared to 55.35 Birr at the official bank rate, controlled by the authorities. However, it is reluctant to do so in the absence of a financial package to stabilize its currency and for reconstruction efforts.
The forum marked the 10th anniversary of the BRI, a global infrastructure and energy network plan initiated by China. While it is seen by some as a means for Beijing to extend its geopolitical and economic influence, it is primarily presented as a tool to enhance global trade.
China is the country’s largest trading partner and has continued to invest in the country’s infrastructure, recently building an innovation city in Addis Ababa, as well as expansion of Cargo facilities for Ethiopian Airlines. Ethiopia has faced conflict and political crisis in recent years. However, GDP growth remains relatively high at 6.2% for 2023 and 6.4% in 2024, according to the IMF.