Ethiopia’s Ministry of Finance announced on Friday that it cannot proceed with a draft restructuring of its US$1 billion 6.625% Eurobond notes due 2024, after the Official Creditor Committee (OCC) deemed the terms non-compliant with the comparability of treatment principle under the G20 Common Framework.
The OCC, co-chaired by Yang Jing and Thomas Rival, informed Finance Minister Ahmed Shide in a January 28 letter that the Agreement in Principle (AIP) reached January 2 with the Bondholders’ Ad Hoc Committee falls short. The committee commended good-faith negotiations but warned the deal would deliver a “very low restructuring effort” from private bondholders, risking vastly diverging concessions compared to official creditors. It highlighted the inclusion of Value Recovery Instruments (VRIs), tied to future economic upside, as adding complexity and potential misalignment.
The ministry’s statement, posted on its official Facebook page, followed consultations with the OCC and IMF to verify alignment with comparability standards and Ethiopia’s Extended Credit Facility (ECF) program parameters. Proceeding would contradict the July 2025 Memorandum of Understanding with official creditors and jeopardize macroeconomic stability amid ongoing reforms.
Ethiopia defaulted on the bond in late 2023 and is restructuring under the G20 framework, requiring equitable treatment across official bilateral, private, and other creditors.
Ethiopia’s application for debt restructuring was filed in February 2021, with talks beginning five months later. On September 16, 2021, a creditor committee comprising 12 countries, co-chaired by China and France, was formed. The committee includes Ethiopia’s major creditors, such as Denmark, France, Italy, Korea, Japan, and the Saudi Fund for Development. China is the major bilateral non-Paris Club creditor, claiming 30pc of the total external debt stock.
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