The International Monetary Fund’s (IMF) executive board is scheduled to meet this week to discuss Ethiopia’s progress under its $3.4 billion loan program, potentially unlocking a new disbursement of over $250 million, Bloomberg reports.
The formal meeting, set for Friday, January 17, will focus on the completion of the second review of the extended credit facility, following a staff-level agreement reached last year.
The IMF confirmed the board meeting, stating that the review is expected to pave the way for the next tranche of funding. If approved, this would provide crucial financial support to Ethiopia, which has been grappling with economic challenges.
However, the review comes amid ongoing complexities in Ethiopia’s debt restructuring process. According to sources familiar with the matter, there is currently no agreement in principle between the Ethiopian government and its official creditors regarding a debt rework. These sources requested anonymity as the details of the negotiations are not yet public.
Despite the lack of a formal debt agreement, the IMF indicated that “key milestones have been reached under the Common Framework process, and IMF staff assess that sufficient progress has been made to recommend approval of the review to the Board.”
Debt Talks Drag On
During the first review of the loan program, published in November, IMF staff noted that Ethiopian authorities were committed to securing an agreement with official creditors by the time of the second review. The absence of such an agreement suggests a delay in these crucial debt discussions. Ethiopia is restructuring its external debt under the G20’s Common Framework, which requires the IMF to conduct a debt sustainability analysis (DSA) that guides negotiations with creditors on the necessary level of debt relief.
Ethiopia’s external debt includes $12.4 billion owed to other countries. China and France are co-chairing the creditor committee tasked with addressing Ethiopia’s debt situation, with other nations like Israel, Japan, and India also participating. Ethiopia also faces the challenge of negotiating with private bondholders, following a default on a $1 billion eurobond in December 2023. As of Thursday, that 2024 bond was trading at around 80.9 cents on the dollar.
