Ethiopia and China Reach Agreement on Debt Treatment
Ethiopia reached a resolution with China on debt treatment during a meeting today. Both nations reaffirmed their commitment to the G20 Common Framework process.
The finance ministry of Ethiopia has announced a successful resolution with China regarding debt treatment, marking a pivotal step toward formalizing a bilateral agreement under the G20 Common Framework. This development follows high-level discussions between the finance ministers of both nations, focusing on restructuring efforts and future economic cooperation.
The resolution was reached during a meeting in China where officials discussed the implementation of ongoing infrastructure projects and explored new financing opportunities. A key highlight of the talks included plans for the development of the new Bushoftu International Airport. Both sides reaffirmed their commitment to working constructively within the parameters established by the G20 to ensure the signing of a formal bilateral deal.
The two sides reached a resolution on the debt treatment and reaffirmed their commitment to working constructively within the G20 Common Framework parameters toward signing the bilateral agreement.
Ethiopia originally sought to restructure its sovereign debt in 2021 after the economic pressures of the COVID-19 pandemic severely strained its national finances. The country later entered a state of default in 2023 on its $1 billion Eurobond after failing to meet a $33 million coupon payment.
Despite the progress with China, Ethiopia continues to face significant pressure from private creditors. Bondholders are reportedly preparing legal action against the government following resistance from bilateral creditors to a preliminary arrangement aimed at restructuring the $1 billion Eurobond. This ongoing dispute with private investors threatens to delay the country's full exit from external debt default.
