Ethiopia’s bondholders are planning to sue the government after its bilateral creditors blocked a preliminary agreement on restructuring its $1 billion bond, a move that could delay the country’s efforts to come out of an external debt default.
Here is a timeline of key events in Ethiopia’s debt restructuring:
- November 2020: War breaks out in the northern region of Tigray between forces loyal to the regional government and the federal military, further straining government finances hit by the COVID-19 pandemic.
- Disruptions related to the war and COVID lead to the collapse of a $2.9 billion IMF programme agreed in December 2019.
- January 2021: The government says it will seek to restructure its sovereign debt under a new G20 initiative to offer relief to developing economies, which is known as the Common Framework.
- June 2022: Talks with the IMF resume.
- October 2022: The government in Addis Ababa bans the import of dozens of products including cars, liquor and household goods due to acute foreign currency shortages.
- March/April 2023: An IMF team visits Ethiopia on a staff mission for talks with authorities.
- August 2023: Ethiopia says it has secured a debt servicing suspension from China, one of its key creditors.
- September/October 2023: Another IMF team visits Addis Ababa for talks with authorities.
- November 2023: The government reaches an agreement in principle with its official creditors on an interim debt service suspension.
- December 2023: The country defaults on its $1 billion Eurobond after missing a $33-million coupon payment. That causes its sovereign bond to slide and ratings agencies cut the country’s credit rating to reflect the default.
- July 29, 2024: The central bank floats the birr currency, a key demand of the IMF for a new financing arrangement, sending it sharply down against the dollar. Hours later, the IMF approves a four-year, $3.4 billion programme, paving the way for Ethiopia’s debt restructuring to move forward.
- August 14, 2024: A group of foreign bondholders, known as the ad hoc committee, expresses disappointment over the government’s comments about a potential 20% principal haircut as a result of the restructuring.
- September 27, 2024: The IMF says it has reached a staff-level agreement with the government after the first review of the reforms programme.
- October 1, 2024: Ethiopia invites its bondholders to negotiate in parallel with official creditor talks to expedite the debt overhaul.
- February 17, 2025: The ad hoc committee of foreign bondholders accuses the IMF of putting out a flawed report on Ethiopia’s economy, to support the case for insolvency treatment.
- March 21, 2025: The government announces it has reached an agreement in principle with its Official Creditor Committee, which represents bilateral creditors such as France and China. The deal was formalised in July.
- January 3, 2026: The government says it had reached a preliminary restructuring agreement with bondholders, sending the bond higher as the market welcomed the resolution.
- January 30, 2026: The government says it will renegotiate terms of restructuring the bond after official creditors rejected the initial agreement. A group of bondholders warns it plans to take legal action.
