ADDIS ABABA, June 29 – Ethiopia has reached a preliminary agreement with a key group of bondholders on restructuring its US$1 billion Eurobond, marking a breakthrough in the country’s prolonged efforts to resolve its external debt obligations following its sovereign default.
In a statement issued on Monday, Ethiopia’s Ministry of Finance said negotiations held between 5 June and 28 June had resulted in an “agreement in principle” on the framework for restructuring the country’s only outstanding international bond.
The latest development follows years of slow-moving negotiations after Ethiopia sought debt restructuring under the G20 Common Framework in 2021 before defaulting on its Eurobond in 2023.
According to the finance ministry, discussions centred on the structure of a new financial instrument that could be offered to bondholders alongside a newly issued bond as part of the restructuring package.
The ministry said both parties had agreed on the creation of a New Money Warrant, adding that the proposed terms have been submitted to the International Monetary Fund (IMF) and the co-chairs of Ethiopia’s Official Creditor Committee for review.
According to the government, the IMF confirmed that the proposed warrant is consistent with the Fund’s debt sustainability targets and parameters for Ethiopia, while the co-chairs of the Official Creditor Committee issued their non-objection to the proposed arrangement.
The agreement represents an important milestone in Ethiopia’s efforts to restore debt sustainability and rebuild investor confidence after years of fiscal pressures driven by conflict, foreign exchange shortages and broader macroeconomic challenges.
Successful completion of the restructuring would help normalise Ethiopia’s relationship with international capital markets and support the implementation of its wider economic reform programme, which is being pursued alongside continued engagement with multilateral lenders and official creditors.
