CEM REPORT, ECONOMY | Several African nations are seeking debt relief from its various creditors to be able to stabilise their economies in the face of global economic challenges. The latest to seek relief from its creditors is Ethiopia.
According to the International Monetary Fund (IMF), Deputy Director for Africa, Annalisa Fedelino, Ethiopia who recently got relief from China over its debt is seeking similar treatment from the institution.
Reuters reports that Fedelino said that the IMF was “almost there” on a loan programme agreement with Ethiopia and that once that was in place the Fund was confident that a Common Framework debt rework would move quickly.
“The Chinese authorities have already provided debt relief to Ethiopia and we understand that they’re in the process of requesting a similar treatment from other creditors. So this is very encouraging,” Annalisa Fedelino said in comments to reporters at the IMF’s annual meetings in Marrakech, Morocco.
Africa’s second-most populous country’s external debt totalled $28.2 billion at the end of March. It includes a $1 billion international bond maturing in December 2024. Between 2006 and 2022, Chinese lenders committed to more than $14 billion of loans to the landlocked country, according to Boston University.
Ethiopia requested a debt rework under the Group of 20’s Common Framework in 2021, an initiative for restructuring government debt aimed at low-income countries. Ethiopian authorities said in August that China was allowing Ethiopia to suspend debt payments for the fiscal year running until July 7, 2024.
Like Nigeria, Ethiopia is struggling to maintain a regular supply of foreign exchange supply leading to shortages and a wide gap between the official and black market currency exchange rates.
On the black market, $1 currently buys around 100 birr, compared to 55.35 birr at the official exchange rate, which is controlled by authorities. In Nigeria, $1 goes for over ₦1,000 at the parallel market while it maintains an average of ₦775 at the official window.