Creditors ready to give Ethiopia more time to negotiate IMF deal
Ethiopia’s official creditors are ready to extend a June 30 deadline for the country to reach a deal with the International Monetary Fund on a new program, according to a person with direct knowledge of the talks.
The IMF cutoff date is part of a debt standstill provided to Ethiopia by most members of the official creditor committee, including the Paris Club and countries such as India and Saudi Arabia, to suspend debt service for two years until the end of 2024. The panel’s interaction with the IMF has signaled talks for a program are making progress, the person said.
The country’s official creditors in November set the deadline for the government to reach a preliminary deal with the Fund known as staff-level agreement, and without an extension, official creditors could declare the debt-servicing suspension deal null and void. The extension would give Ethiopia more time to reach an agreement with the Fund beyond this week.
The person declined to provide clarity on how long the cutoff date would be extended, asking not to be named because talks are private. Officials at the finance minister and the central bank didn’t reply to a request for comment. An IMF spokesman said the Fund will continue to work closely with the country’s authorities in the coming weeks.
China, a key bilateral lender, is not part of this deal as it provided a separate debt standstill agreement. But Beijing is a member of the official creditor committee for debt rework negotiations.
An IMF bailout would lay out the parameters for a debt restructuring, allowing the country to restructure billions of dollars in external debt using the Group of 20’s Common Framework mechanism, which seeks to coordinate talks between official creditors. Ethiopia is in talks with the IMF to agree on a new loan after its latest program went off track in 2021, as a civil war soured investor sentiment and sapped economic growth.
An IMF mission visited Addis Ababa at the end of March for talks with Ethiopian officials, and the talks continued during the IMF’s spring meetings in mid April and virtually since then, IMF spokeswoman Julie Kozack said last month. She said at that point that “substantial progress” had been made towards an agreement on how the IMF could support the nation’s economic agenda.
The Horn of Africa nation would also need to negotiate a deal with overseas private creditors after it defaulted on a $1 billion Eurobond in December.
