Ethiopia's $4.9B Debt Relief: A Path to Economic Stability

Ethiopia is set to receive $4.9 billion in debt relief following a restructuring effort, as announced by State Finance Minister Eyob Tekalign. The country aims to finalize agreements with creditors soon, following the approval of a new IMF financing program. Additionally, recent economic reforms include a significant currency adjustment.

Ethiopia is on track to secure $4.9 billion in debt relief after concluding a long-overdue restructuring, State Finance Minister Eyob Tekalign announced Friday. The country plans to finalize agreements with creditor nations in the coming months, after recently securing a new International Monetary Fund financing program.

The country's total external debt stood at $28.38 billion as of March, according to finance ministry data. Prime Minister Abiy Ahmed highlighted that the debt overhaul includes $200 million from the restructuring of its $1 billion Eurobond, achieved through a nominal reduction of the bond's value.

In a significant policy shift, Ethiopia switched to a market-determined foreign exchange rate, causing the birr to depreciate by at least 31.5% against the dollar. The federal trade ministry has since cracked down on over 700 shops for price hikes and hoarding amid inflation concerns, aiming to promote private sector growth and long-term economic stability.

(With inputs from agencies.)