In an initial assessment, the IMF and the World Bank concluded that Ethiopia’s debt is sustainable, according to the fund’s Africa department Director Abebe Aemro Selassie. The preliminary sustainability assessment is a key step for the Horn of Africa nation to rework its public debt under a Group-of-20 program to ease repayment burdens of poor countries hit by the coronavirus pandemic. (Getty Images)
Rescheduling Payments to Ease Ethiopia Debt Risks, IMF Says
Extending external-loan repayments over a longer period will help Ethiopia ease debt risks in the future, according to the International Monetary Fund
In an initial assessment, the IMF and the World Bank concluded that Ethiopia’s debt is sustainable, according to the fund’s Africa department Director Abebe Aemro Selassie. The preliminary sustainability assessment is a key step for the Horn of Africa nation to rework its public debt under a Group-of-20 program to ease repayment burdens of poor countries hit by the coronavirus pandemic.
Ethiopia, Chad and Zambia have signed up to the so-called G20 Common Framework, which is available for 72 of the world’s poorest countries.
Ethiopia’s debt is assessed to be sustainable, but a reprofiling of debt service in coming years over a longer period will enable a moderate risk of debt distress to be reached by the end of the Fund-supported program,” Selassie said in an interview. The IMF’s analysis of liquidity needs will help inform the country’s creditors committee, which hasn’t yet met, to decide on the type of debt relief.
Ethiopia’s Eurobonds tumbled after the country announced on Jan, 29 its intentions to restructure its external debt. State Minister for Finance Eyob Tekalign Tolina has said the country has not decided how Eurobond-holders will be treated, but vowed a “market-friendly” solution to guarantee access to markets in debt coming debts.
Yields on the nation’s 2024 Eurobonds fell 18 basis points on Thursday to a two-month low.
A new committee of official bilateral creditors of Chad will meet this week to start deliberations on that country’s request to restructure its external obligations, Abebe said. Under the program, debtors rework their credits with government lenders and are required to seek similar terms of the resulting bilateral restructuring with private creditors.
Commodity trader Glencore Plc is Chad’s largest private creditor, with an oil-backed facility worth more than $1 billion.
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