ADDIS ABABA – Ethiopia’s State Finance Minister Eyob Tekalign said on Friday that the country anticipates its creditors will agree to restructure $4.9 billion of debt once it completes its ongoing restructuring efforts.
The announcement comes as Ethiopia revives its protracted debt overhaul, following the approval of a new financing program from the International Monetary Fund (IMF).
The agreement, reached at the end of last month, will provide Ethiopia with $3.4 billion over a four-year period.
The deal with the IMF was disclosed shortly after Ethiopia floated its currency, the birr, in line with one of the IMF’s recommendations. The birr’s liberalization is a key element in the government’s strategy to reduce its debt-repayment obligations.
Tekalign noted that the government expects to finalize agreements with individual creditor countries in the upcoming months. As of March, Ethiopia’s external debt exceeded $28 billion, with private creditors holding roughly 5% of this amount.
The majority of the debt is linked to the $1 billion Eurobond.
Prime Minister Abiy Ahmed, in a televised address on Thursday, outlined recent macroeconomic reforms, including the shift to a market-determined exchange rate and the introduction of a new interest-rate-based monetary policy framework.
Ahmed defended the decision to liberalize the currency, stating it aimed to bridge the gap between official and black market rates.
Since the currency float, the birr has depreciated by 31.5% against the dollar, prompting concerns from economic analysts about potential inflation spikes.
Concerns about inflation’s impact on low-income households have led at least two local governments to take action against shops raising prices.
Despite these challenges, both the government and its creditors maintain that the liberalization measures will enhance private sector contributions to the economy and support long-term growth.
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