Following extensive negotiations with G20 nations, the Ethiopian government has revealed that it has successfully negotiated a debt restructuring worth about USD five billion. Meanwhile, China has pledged to help the government’s economic reform in addition to finalizing the debt reprofiling agreement.
The International Monetary Fund (IMF) has reached an agreement with the government to allocate USD 3.4 billion to support government policy to correct the economic challenges, in addition to introducing a floating exchange rate, since G20 financers assured the IMF that they would restructure Ethiopian debt under the Common Framework (CF).
Senior diplomats at the Chinese Embassy in Ethiopia have given assurances that Ethiopia will continue to receive support from their government at this crucial period.
China and France co-chaired the G20’s CF creditor group, which was tasked with negotiating Ethiopia’s protracted loan restructuring.
On Thursday, August 1st, the Prime Minister Abiy Ahmed administration announced that it had successfully negotiated a debt restructure worth USD 4.9 billion.
According to Abiy, “private lenders will be included in the debt restructuring.” Nonetheless, the nation benefited from a debt servicing standstill for bilateral creditors during the past budget year.
The Chinese Embassy’s Charge d’Affaires ad interim (a.i.), Shen Qinmin, recalled that in 2023, China and Ethiopia had reached agreements on a number of subjects under the direction of President Xi and Prime Minister Abiy.
“The nations elevated our all-weather strategic alliance from a comprehensive strategic and cooperative collaboration, which will undoubtedly strengthen our practical cooperation. The Senior Diplomat recalled that China “supported Ethiopia’s admission into the BRICS family, demonstrating our sincerity and determination for pursuing common prosperity with Ethiopia and other emerging markets.”
China has fully executed the G20’s Debt Service Suspension Initiative (DSSI), with the greatest overall debt suspension among the G20 countries, according to the Charge d’Affaires a.i., who also informed Capital that China, together with relevant members, has contributed to Ethiopia’s debt treatment.
“Going forward, we will maintain our close collaboration with Ethiopia to investigate debt relief strategies through both bilateral and multilateral avenues, and endeavor to mitigate Ethiopia’s debt challenges to the best of our abilities,” he added.
According to Yang Yihang, Minister Counsellor of the Chinese Embassy, the Export-Import Bank of China, the China Development Bank, and Ethiopia have just achieved an agreement on a debt suspension plan, which is being progressively carried out.
He told Capital that the discussions between Ethiopia and the Industrial and Commercial Bank of China had also advanced.
“China believes that Ethiopia, as an active partner, would finish the necessary processes as soon as possible to ensure an early delivery of the agreement, thereby easing the burden on liquidity and advancing our cooperation into a new phase. These results will also set a positive example for other creditors,” he continued.
The two senior diplomats anticipate deeper and more comprehensive policy connectivity. They said that there will be a closer alignment between the Belt and Road Initiative and Ethiopia’s ‘The second phase Homegrown Economic Reform Plan from 2024 to 2026.’
The further deepening of reform comprehensively to advance Chinese modernization, put forward at the 3rd Plenary Session of the 20th CPC Central Committee, will offer another golden opportunity that is even better coordinated with Ethiopia’s economic reform and development.
“We will have even more promising prospects for cooperation in traditional and new-type infrastructure projects,” they said.
They stated that China will support Chinese companies to actively participate in Ethiopian transportation infrastructure, renewable energy power generation facilities, and other projects through various financing channels, “We will continue to guide enterprises to contribute to the sustainable development of the railway with their technology and service.”
According to the diplomatic mission leaders, there will be enhanced financial connectivity, “New progress will be gained in local currency swaps and cross-border settlement cooperation. Cooperation in financial supervision will be further strengthened.”
Despite claims from Western allies that China is responsible for a third of Ethiopia’s over USD 28 billion in external debt, the Far Eastern country was not taken seriously.
