Ethiopia has reached a major breakthrough in its long-awaited debt restructuring process under the G20 Common Framework, signing a Memorandum of Understanding (MoU) with its Official Creditor Committee (OCC). The agreement, announced by the Ministry of Finance, formalizes a debt treatment plan agreed in principle earlier this year, providing Ethiopia with over USD 3.5 billion in relief.

This landmark deal marks a critical step toward restoring Ethiopia’s long-term public debt sustainability and concludes years of complex negotiations. The East African nation expressed deep gratitude to the OCC members, especially co-chairs China and France, for their unwavering support in reaching this agreement.With the MoU now signed, Ethiopia will work to finalize bilateral agreements with each OCC member to implement the agreed terms.

Eyob Tekalign, State Minister of Finance, emphasized Ethiopia’s commitment to a swift and cooperative process, “Ethiopia remains confident that the collaborative and pragmatic spirit that has prevailed so far will help expedite the process of finalizing bilateral agreements,” he stated. “We continue to engage in good faith with all other external creditors, including bondholders, to secure restructuring terms that align with our debt relief needs and the principle of comparability of treatment.”The government hopes this agreement will pave the way for similar deals with private creditors, ensuring comprehensive debt relief and reinforcing Ethiopia’s economic recovery efforts.

In a landmark move to modernize its financial sector, the National Bank of Ethiopia (NBE) has mandated the dematerialization of all government and NBE securities, transitioning from paper-based certificates to an electronic book-entry system. The new directive, No. MFAD/001/2025, aims to enhance market efficiency, transparency, and investor confidence while mitigating systemic risks.

As per the new directive all government and NBE securities must now be held electronically in a Central Securities Depository (CSD).The shift eliminates the need for physical documents, reducing fraud risks and streamlining transactions and the electronic records in the CSD will serve as the sole legal proof of ownership.

According to the directive NBE & Ministry of Finance oversee the transition, verify securities, and ensure data accuracy.

It added that CSD operator shall maintains digital records, assigns unique security codes (NSIN/ISIN), and enforces compliance.

The new directive indicated that banks and financial institutions, who are potential CSD members, would assist investors in converting physical certificates, conduct KYC checks, and submit documents to the CSD.

Investors who fail to convert their securities within five years will have them transferred to a special government account, with forfeited benefits unless valid justification is provided.The move positions Ethiopia’s securities market among modern, digitally driven economies, improving liquidity, reducing paperwork, and attracting more investors.

The National Bank of Ethiopia (NBE) has canceled a directive that required commercial banks to buy Treasury Bonds ( T-bonds) in a crucial move that could reshape Ethiopia’s financial sector.

Directive No. MFAD/TRBO/001/2022, which required banks (except the Development Bank of Ethiopia) to invest a portion of the loans borrowed and issued in government treasury bonds, was officially revoked on June 30, 2025.

The new directive, titled “Treasury Bond Procurement (Revocable) Directive No. MFAD/TRBO/002/2025”, shows that the National Bank has changed its approach to the management of money laundering and the provision of loans in the banking sector.

While the previous directive, which came into effect from 2022, aimed to spend money on government finances, it would have restricted the capital that commercial banks could access for direct loan provision

.The repeal of the directive is expected to bring greater flexibility to the activities of Ethiopian banks. With the lifting of the mandatory bond procurement requirement, banks will have greater discretionary power over their investment portfolios, and most importantly more capital to provide loans to businesses and individuals.

The central bank said that under the previous guidelines, any Treasury bonds designated for June 2025 that have not yet been purchased will apply. Banks are given notice that they are obliged to repay these purchases by July 15, 2025.

Furthermore, it was noted that any treasury bonds issued prior to the issuance of the new directive or issued under the interim decree will continue to be governed by the provisions of Directive No. MFAD/TRBO/001/2022.