Ethiopia to Save $4.9 Billion Through Debt Restructuring, Says State Minister

Ethiopia is set to receive $4.9 billion in relief from debt repayments upon the completion of its long-delayed restructuring process, State Finance Minister Eyob Tekalign announced on Friday. The East African nation, which became the third economy on the continent to default on its debt at the end of 2023, aims to reinstate the debt overhaul after securing a new financing program with the International Monetary Fund (IMF) this week.

Debt Restructuring Agreements

"We will sign and finalize agreements with each individual creditor country over the course of the next few months," Eyob told Reuters, highlighting the anticipated savings for Ethiopia as a result of the restructuring efforts. The country's total external debt was reported at $28.38 billion as of March this year, according to data from the finance ministry.

Economic Reforms and Eurobond Restructuring

In a televised speech on Thursday, Prime Minister Abiy Ahmed discussed recent economic reforms, emphasizing that the expected savings include $200 million from restructuring the nation's $1 billion Eurobond. Eyob elaborated that this could be achieved through a "nominal reduction" of the bond's value as part of the overall debt rework.

Currency Reforms and IMF Support

Prime Minister Abiy also defended the recent move to a market-determined foreign exchange rate, asserting that it was designed to close the gap between the official and black market rates, rather than devalue the currency. On Monday, the central bank allowed the Ethiopian birr to float freely, meeting a key condition for securing IMF support.