Ethiopia will abandon a proposed debt restructuring deal for its US$1 billion Eurobond after official creditors said the draft did not meet requirements under the G20’s Common Framework, the finance ministry said on Friday.
“The OCC (Official Creditor Committee), through its co-chairs, has informed Ethiopia of its assessment that the draft restructuring deal does not fully meet the requirements of the Comparability of Treatment principle,” the ministry said in a statement posted on its Facebook page.
Comparability of Treatment is a core principle of the G20 Common Framework, requiring a debtor country to seek debt relief from private creditors on terms comparable to those agreed with official bilateral lenders. The aim is to ensure a fair burden-sharing among all creditor groups.
Ethiopia, which defaulted on its Eurobond in December 2023, has been seeking to restructure its external debt amid acute foreign currency shortages and the lingering economic impact of conflict and climate shocks. The country is also negotiating debt relief with bilateral creditors under the Common Framework, a process that has proven lengthy and complex.
The now-scrapped proposal was intended to form the basis of talks with holders of the Eurobond, which matures in 2024 and carries a coupon of 6.625%. However, the finance ministry did not provide details on how the draft fell short of comparability requirements or outline the next steps in negotiations with private creditors.
Ethiopia said it would continue to engage with its official creditors and bondholders to reach a restructuring agreement that complies with the Common Framework and supports the country’s economic recovery.
The move highlights ongoing challenges faced by countries using the G20 mechanism, which has been criticised for slow progress and uncertainty for investors. Several African nations, including Zambia and Ghana, have spent years negotiating restructurings under the framework.
Ethiopia is implementing a reform programme backed by the International Monetary Fund, aimed at stabilising the economy, restoring debt sustainability and rebuilding foreign exchange reserves. Resolving the Eurobond restructuring is seen as a key step toward restoring investor confidence and regaining access to international capital markets.
