The announcement was made in Addis Ababa alongside International Monetary Fund (IMF) Managing Director Kristalina Georgieva, as Ethiopia seeks to ease its financial burden under a G20 initiative.  

The country has been working towards restructuring its foreign debt, a process that has been slow despite ongoing discussions. Mered Fikireyohannes, Founder and Chief Executive Officer at Pragma Investment Advisory, noted that these negotiations form a critical part of Ethiopia’s broader economic reform agenda.  

“The IMF talks have been ongoing for almost five years, but in the last two years, discussions have mainly focused on comprehensive macroeconomic reforms under Ethiopia’s homegrown economic reform plan,” he said. “In July last year, Ethiopia and the IMF reached an agreement on a four-year economic reform plan, which is now in implementation.”  

The reform plan, backed by the IMF and other development partners, aims to stabilise Ethiopia’s economy through various measures, including floating the exchange rate, opening up markets, and restructuring fiscal and monetary policies.  

One of the most pressing aspects of the reform is the restructuring of Ethiopia’s external debt, which currently stands at approximately $31 billion. Of this, $1 billion is a Eurobond issued in 2014. “As part of the IMF’s follow-up review, the Ethiopian government is expected to finalise a memorandum of understanding with its creditors, including bondholders, before March,” Fikireyohannes said.  

He confirmed that this is what Ethiopia’s finance minister meant when he said negotiations were in their final stages. “Having that agreement is critical for the IMF-backed economic reform plan and the restructuring process Ethiopia is undertaking. It is part of the agreement with the IMF to ensure Ethiopia renegotiates its debt with improved payment terms,” he explained.  

At the end of June last year, Ethiopia’s external debt was recorded at nearly $29 billion. The restructuring talks are primarily focused on this figure, with Ethiopia negotiating with the Paris Club, chaired by China and France, to secure a new repayment schedule spanning five to ten years.  

“Ethiopia is also committed to treating bondholders fairly in the restructuring process. Of the $29 billion debt, about $28 billion is owed to multinationals, bilateral lenders, and other countries,” Fikireyohannes said. “A new payment structure is expected to be agreed upon with the Paris Club and bondholders, aligning with Ethiopia’s economic reforms to instil confidence among creditors.”  

The country’s economic outlook has shown signs of improvement, particularly following the decision to float the Ethiopian birr. “With the currency float, we are seeing better export and remittance numbers. The overall balance of payments is improving, and this aligns with the debt restructuring plan,” Fikireyohannes explained.  

Ethiopia’s agreement with the IMF, reached in July last year, forms a crucial part of these discussions. “The economic reform plan is designed to introduce comprehensive macroeconomic reforms,” he said. “This includes floating the currency to ensure the balance of payments reflects the real economy, modernising monetary policies, and preventing excessive money printing, which

--ChannelAfrica--