Ethiopia would get debt treatment under the G20 Common Framework, the finance ministry announced over the weekend..
It comes as the East African nation and the Official Creditor Committee (OCC) reached an Agreement in Principles (AIP) on the main financial parameters for debt reduction.
The debt treatment will cover approximately $8.4 billion of outstanding public debt, the ministry said in a statement.
In line with the agreement reached earlier with the IMF, Ethiopia has committed to negotiate with its external creditors a debt treatment delivering $3.5 billion reduction in debt service over the program period, and restoring debt sustainability on an ongoing basis.
The AIP with the OCC goes a long way in achieving these objectives, with a debt service relief totaling approximately $2.5 billion over the period 2023-2028, and a significant smoothening of Ethiopia’s external redemption profile with a material reduction of its cost, it added.
Ethiopia 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 statement said.
According to the statement, 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.
The agreement will support ongoing good faith engagement with external commercial creditors, including bondholders.
MG/as/APA