Ethiopia reaches Agreement in Principle with its Official Creditor Committee on a Debt Treatment under the G20 Common Framework

Ethioreview –  The Ministry of Finance of the Federal Democratic Republic of Ethiopia (“Ethiopia”) is very pleased to announce it has reached an Agreement in Principle (“AIP”) with its Official Creditor Committee (“OCC”) on the main financial parameters of a debt treatment under the G20 Common Framework, covering approximately USD 8.4bn of outstanding public debt.

In the context of a financing package already agreed with the IMF, Ethiopia has committed to negotiate with its external creditors a debt treatment delivering USD 3.5bn reduction in debt service over the program period, and restoring debt sustainability on an ongoing basis. The AIP with the OCC go a long way in achieving these objectives, with a debt service relief totalling approx. USD 2.5bn over the period 2023-2028, and a significant smoothening of Ethiopia’s external redemption profile with a material reduction of its cost.

Ethipia commends the leadership of its OCC co-chairs, China and France, as well as the support and cooperation of all OCC members in reaching this agreement. The Government is confident that this debt treatment will allow for the allocation of additional financial resources towards critical public investments in the context of Ethiopia’s Perspective Development Plan.

This agreement will support ongoing good faith engagement with external commercial creditors, including bondholders. In that regard, Ethiopia would like to reaffirm its commitment to transparency, comparable treatment of all participating external creditors, and full compliance with debt sustainability targets under its IMF-supported program.

The Minister of Finance Mr Ahmed Shide issued the following statement:

“This agreement marks a significant milestone in our efforts to normalize our relations with international partners and deliver economic stability to the Ethiopian people. We extend our sincerest appreciation to the OCC and its co-chairs, for the unwavering support in resolving our country’s public debt situation.”

The terms of the AIP will be further described and formalized in a Memorandum of Understanding between Ethiopia and its official bilateral creditors, which will then be implemented through bilateral agreements with each member of the OCC. The Government looks forward to a prompt implementation of the agreed terms.

Questions can be directed to Ethiopia’s financial advisor Lazard Frères.

Via ENA