Ethiopia expects to reach a preliminary agreement with the International Monetary Fund (IMF) this week on the third review of its $3.4 billion loan program, according to State Finance Minister Eyob Tekalign. Formal debt restructuring negotiations with bondholders are anticipated to begin this summer. Speaking at the IMF-World Bank Spring Meetings in Washington, Eyob said discussions with IMF Managing Director Kristalina Georgieva and other officials showed strong satisfaction with Ethiopia’s reform progress. The East African nation, under a four-year program agreed in July 2023, has launched sweeping reforms, including floating the birr currency and targeting economic stabilization.
“They are very much pleased with how the program is going,” Eyob told Reuters, citing overachievement in foreign reserve accumulation, inflation control, and export growth. He expects the IMF executive board to formally approve the review in June, unlocking the next tranche of funding. On debt talks, Eyob confirmed productive informal discussions with some holders of Ethiopia’s $1 billion Eurobond, though formal restructuring negotiations are delayed pending the IMF’s updated Debt Sustainability Analysis (DSA). Ethiopia, which defaulted on its Eurobond in December 2023, had earlier reached a draft restructuring deal with official creditors on $8.4 billion of debt, focusing on extending maturities and lowering interest rates without imposing haircuts.
“We must ensure comparability of treatment with all creditors,” Eyob emphasized, downplaying debates over whether Ethiopia faces a liquidity or solvency crisis. “The goal is sustainable development financing.” Ethiopia originally sought debt relief under the G20 Common Framework in 2021 to cope with mounting external obligations amid civil conflict and economic pressures.
Separately, Eyob said talks are ongoing with China’s Export-Import Bank and China Development Bank for concessional financing of major infrastructure projects, including the Addis Ababa light rail expansion and airport upgrades. Discussions with the U.S. International Development Finance Corporation also explored potential U.S. investment and financing guarantees in sectors like energy, transport, and urban development. With key debt and financing milestones approaching, Ethiopia aims to reinforce its economic recovery while managing complex creditor negotiations.
