Prime Minister Abiy Ahmed (PhD) had a darting tour of Europe last week, where he visited three countries in two days. In Paris, he met his counterpart, Emmanuel Macron, whose country co-chairs with China a creditors' committee negotiating Ethiopia's external debt. Two of his senior officials, Mamo Mihretu, governor of the central bank, and Eyob Tekalign (PhD), state minister for Finance, were in Paris meeting French officials to shore up support to move forward with debt restructuring.
Ethiopia is one of three African countries - Chad and Zambia included - urging its creditors for debt restructuring under the G20 framework agreement, a.k.a Debt Service Suspension Initiative (DSSI). It was launched in response to the COVID-19 pandemic, providing debt relief to the world's poorest and most vulnerable countries. Ethiopia's annual debt service of over two billion dollars was suspended before December 2021. Although extended for another six months, the initiative expired in June 2022.
Ethiopia owes its creditors 26.8 billion dollars up until September last year, which dropped by over one billion dollars from June of the same year, owing it to an appreciated value of the Dollar. It is a trend that continues to help the country save from currency fluctuations of the Dollar against other currencies. Since September, external debt stock has declined by 2.6 billion dollars, about nine percent, compared to June 2021. Official creditors (bilateral and multilateral) claim 81pc of the external debt, while private creditors have the balance, with Euro bondholders taking 3.72pc of the share.
However, private creditors were seen as unenthusiastic about the complex and ongoing debt restructuring process, which Ethiopian authorities see as critical for economic stability and growth. They have a lot of miles to travel before they see meaningful responses.
PUBLISHED ON
Feb 11,2023 [ VOL
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1189]
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