Ethiopia has finally secured an agreement with external creditors for a debt relief of $1.5 billion as it continues to struggle with foreign currency shortages.
A deadly war in the country’s northern regions and protracted conflicts elsewhere have left Ethiopia’s economy in tatters. The country is struggling to secure funds and as many global firms lose confidence due to instability foreign direct investment has been in short supply.
Lengthy talks have been had between the government and international finance institutions to salvage the economy from total collapse- particularly after a peace deal silenced the guns in Tigray region more than a year ago.
Now the debt service relief agreement is seen as a progress and an achievement by both the Paris Club of creditor countries as well Ethiopia’s central bank.
The governor of the National Bank of Ethiopia, Mamo Mihretu said because of the temporary debt service suspension agreement Ethiopia managed to “save” a billion and a half dollars that would otherwise been paid for debt service.
Similarly, the Paris Club said the debt standstill would give Ethiopia, which carries around $28 billion in debt, a “time limited liquidity relief” while wider discussion on debt treatment go on.
The club also added if Ethiopia doesn’t manage to get a loan from the International Monetary Fund by the end of March 2024 the agreement could be voided.
