The G20 Pact with Africa reaffirms its contribution to Africa’s recovery from the Covid-19 pandemic


Ethiopia asked the International Monetary Fund for a new deal, days after France and China co-chaired the country’s first panel of major creditors to rework the country’s previous debt.

The establishment of a panel of creditors and an agreement on how to manage Ethiopia’s nearly US $ 30 billion in external debt paves the way for the IMF to determine how to engage with the country on economic recovery.

The Lender’s Board of Directors has yet to approve the Extended Credit Facility and Extended Funding Facility disbursements, the first of which has expired, despite the conclusion of staff-level agreements.

The government has requested a new IMF credit deal, potentially for a similar amount, to replace the one that has just expired, Minister of State for Finance Eyob Tekalign told reporters in the capital, Addis Ababa on Wednesday. .

A new ECF will allow Ethiopia to access concessional resources as part of a poverty reduction and growth agenda, he said.

The IMF’s board approved in December 2019 the equivalent of $ 2.9 billion for Ethiopia’s two credit agreements.

On Thursday, the Washington-based lender said it was “too early” to commit with Ethiopia on a possible new program.

The formation of an Ethiopian creditors panel marks a breakthrough in a global campaign to restructure the debt of poor countries hit hard by the coronavirus pandemic within the common framework of the Group of 20.

It could also define a roadmap for the role of private creditors on the same subject.

The panel could propose that commercial lenders extend their payment due dates by one or two years, Eyob said later in an interview.

“The creditors’ committee will come to an agreement on certain parameters on how to deal with comparable debt treatment,” Eyob said. The “meaning we got was that there was no strong opinion on this, so we hope to get the required amount of debt being restructured without disrupting the market.”

Ethiopia’s January 29 announcement of its intention to restructure its debt sparked the sale of its $ 1 billion Eurobonds. The yield on 2024 debt has since risen and was trading at an all-time high of 11.75% as of 11:07 a.m. in London.

Ethiopia’s economic pain, in the wake of the pandemic, has been exacerbated by a civil war in its northern Tigray region, which has drained public finances.

Ethiopia, along with at least two other African countries, Chad and Zambia, have approached creditors for debt relief under the G-20 program which aims to rework the debt of countries at risk of debt. default amid the fallout from the virus.

Inclusion of China as the co-chair of the creditors committee is essential, according to Mark Bohlund, senior credit analyst at REDD Intelligence.

This “increases the likelihood that the reprofiling of debt service to bilateral creditors will have to be rendered by commercial creditors, for example through soliciting consent from Eurobond holders to delay the payment of coupons.” , said Bohlund.



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