By Muluken Yewondwossen

Ethiopia was among the first countries to seek debt relief under the G20 Common Framework in early 2021, but the debt restructuring

process has taken years. Significant progress was made last month when the country reached an Agreement in Principle (AIP) with its creditor nations.

This agreement is anticipated to be formalized through individual Memorandums of Understanding (MoUs) with the lender countries.

Although the Ethiopian government recently indicated that the MoU would be signed “very soon” without providing a specific timeline, the Global Sovereign Debt Roundtable (GSDR)—co-chaired by IMF Managing Director Kristalina Georgieva, World Bank President Ajay Banga, and G20 co-chair South Africa—has stated that Ethiopia will finalize the MoU by June 2025.

Once signed, this agreement will facilitate the restructuring of Ethiopia’s USD 8.4 billion debt.

During the GSDR meeting at the World Bank and IMF Spring Meetings in Washington, DC, State Minister of Finance Eyob Tekalign acknowledged the lengthy timeline but emphasized the Common Framework’s effectiveness, referencing successful debt restructurings in Zambia and Ghana.

He also highlighted the importance of enhancing transparency by publicly disclosing the terms of debt treatment agreements once an AIP is reached between a borrowing country and its Official Creditors’ Committee.

Furthermore,

Eyob called for a more streamlined process to expedite the transition from an AIP to finalized bilateral agreements with creditor nations.

To minimize further delays, he recommended establishing a faster and more efficient pathway for signing MoUs and subsequent bilateral deals.

The Ethiopian diplomatic mission in Washington, DC, underscored these discussions, emphasizing the need for greater efficiency in the debt restructuring process.