Ethiopia is intensifying efforts to restructure its $1 billion international bond as part of broader debt rework plans.
Investor concerns over potential haircuts have set the stage for tough negotiations and complex debt restructuring.
The debt restructuring stems from currency shortages and revenue challenges due to the Tigray conflict.
Ethiopia’s inclusion in the G20 Common Framework in 2021 aimed to address these issues but faced delays due to the prolonged civil war.
Ethiopia’s floating of its currency in July 2023 secured a $3.4 billion IMF loan, unlocking additional financing.
This funding paved the way for fresh restructuring talks, with the government aiming for $4.9 billion in debt relief.
The government seeks a 20% write-down on its bond, causing friction with bondholders.
Critics argue this undermines Ethiopia’s economic fundamentals, while differing views on solvency and liquidity could lead to lengthy negotiations.
Despite progress in unifying currency rates, challenges persist.
The IMF monitors reforms closely, with reviews scheduled through December.
Both the government and the IMF aim to finalize a restructuring agreement by year-end.
