Ethiopia creditors’ committee meets as Addis seeks new IMF facility

Ethiopia creditors’ committee meets as Addis seeks new IMF facility

Ethiopia’s state minister of Finance, Eyob Tekalign Tolina, speaks during a news conference announcing that Ethiopia has appointed a transaction adviser in the privatisation process for state-run Ethio Telecom, in Addis Ababa, Ethiopia September 26, 2019. REUTERS/Giulia Paravicini/File Photo

ADDIS ABABA, Sept 22 (Reuters) – Ethiopia’s creditors’ committee held its first meeting on Sept. 16, the state minister of finance said on Wednesday, a key step in a bid to restructure its debts under the joint G20’s common framework.

The meeting, which was led by the co-chairs, France and China, was “successful”, State Finance Minister Eyob Tekalign Tolina told a news conference, adding that the next meeting would be held soon.

“How (the) private sector components will be treated is something that the creditors’ committee will work on in the coming weeks,” Eyob said.

Ethiopia said in January it would seek debt relief under a Group of 20 (G20) common framework designed to help governments to overhaul the debt they owe to official and commercial creditors after the COVID-19 crisis deepened the burdens of many developing countries spiralling. read more

That news sent the price of Ethiopia’s dollar bond issue into its biggest one-day fall, dropping around 8 cents in the dollar to under 92 cents. It now trades at around 86 cents.

“We have been assuring them (Eurobond investors) strongly that the government has no solvency issues,” Eyob said.

The amount of debt to be restructured will be known at the next meeting of the committee, he said.

The government in Addis Ababa, whose troops are engaged in a conflict against Tigrayan forces in the north, says the restructuring of debt will help it create stable economic fundamentals.

“This action will provide liquidity relief from the economic challenges created by the COVID-19 pandemic and help establish the fiscal space needed,” the finance ministry said in a statement.

The government has requested a new extended credit facility from the International Monetary Fund, the ministry said, to replace an expired component of a lending program from the IMF that is already in place.