Ethiopia expects to reach a preliminary agreement early this week on the third review of its $3.4 billion loan programme with the International Monetary Fund (IMF), and anticipates formal debt restructuring talks with bondholders starting this summer, State Finance Minister Eyob Tekalign told Reporters.
The East African nation, which secured a four-year $3.4 billion deal with the IMF last July, is undergoing significant reforms, including the floatation of the birr currency and a push to finalize its debt restructuring.
Speaking at the IMF and World Bank Group spring meetings in Washington, D.C., Eyob said he met with IMF Managing Director Kristalina Georgieva and other officials to review progress on the country’s reforms.
“They are very pleased with how the programme is progressing,” Eyob said in an interview on Saturday. “We have seen better-than-expected results in areas such as reserve accumulation, inflation control, and export growth.”
He added that he expects the IMF Executive Board to formally approve the review in June, unlocking the next tranche of financing.
Regarding Ethiopia’s external debt, Eyob noted that initial talks with some holders of the country’s $1 billion international bond were positive, and that formal restructuring negotiations could begin in the summer. However, substantial discussions are pending the IMF’s updated Debt Sustainability Analysis (DSA).
In March, Ethiopia reached a draft agreement with official creditors to restructure $8.4 billion of its debt, focusing on payment extensions and lower interest rates rather than outright debt haircuts. The final agreement is expected within months.
Despite disagreements between bondholders and the government—particularly over whether Ethiopia faces a liquidity crisis or a deeper solvency issue—Eyob emphasized the importance of equitable treatment for all creditors.
“Whether or not there’s a haircut is less important,” he said. “The key goal is to ensure Ethiopia can sustainably finance its development.”
Ethiopia began seeking debt relief under the G20’s Common Framework in 2021 and later defaulted on its sole Eurobond in December 2023.
Eyob also revealed that Ethiopia is in discussions with China’s Export-Import Bank and China Development Bank for concessional financing of major infrastructure projects, including Addis Ababa’s city rail and airport expansions. Additionally, he met with officials from the U.S. International Development Finance Corporation (DFC).
“They consider Ethiopia a priority country, so we are hopeful for increased investment from the U.S. side,” Eyob said, noting that talks with the DFC covered direct project financing and guarantees in sectors such as energy.
