Ethiopia’s public debt remains unsustainable and in distress, with protracted breaches in key vulnerability indicators, according to the United Nations Development Programme’s (UNDP) February 2026 Quarterly Economic Profile.
The report puts Ethiopia’s total public debt stock at $68.8 billion as of June 2024, split between $28.8 billion in external loans and $39.3 billion in domestic debt—a level the IMF deems distressed, requiring $3.5 billion in external debt treatment through 2028 to close balance-of-payments gaps. Export-related metrics continue to signal high risk, exacerbated by global shocks and domestic reforms.
Talks with creditors have dragged on, particularly over the $1 billion Eurobond issued in December 2014 (due December 2024). Ethiopia defaulted on a $33 million payment in late 2023, citing the G20 Common Framework process. A proposed $800 million restructuring in October 2024 was rejected by bondholders seeking full repayment plus a Value Recovery Instrument (VRI) tied to future export earnings.
Progress with official creditors advanced with a March 2025 Agreement in Principle (AIP) and finalized Memorandum of Understanding from the Official Creditor Committee (OCC, co-chaired by France and China). However, in early 2026, the OCC rejected Eurobond terms, citing excessive VRI claims that violate “comparability of treatment” between private and official creditors. Bondholders argue Ethiopia’s liquidity issues stem from policy choices, pointing to reserve build-up and growth overperformance.
The report outlines a chronology of stalled negotiations: interest payments continued until 2023; bondholders demanded full 2024 repayment in January 2025; September 2025 talks ended without agreement; and direct OCC-bondholder communication remains absent. Ethiopia seeks balanced treatment under the Common Framework, while pursuing multilateral, bilateral, and private restructurings.
Amid reforms boosting reserves to $5.5 billion and exports, debt sustainability hinges on forex unification, revenue mobilization, and creditor coordination. The UNDP warns that without resolution, vulnerabilities to global tightening and commodity shocks persist.
