IMF Unlocks $262 Million for Ethiopia Amid Debt Talks

The International Monetary Fund (IMF) has given the green light for the third review of Ethiopia's $3.4 billion loan program, clearing the way for the country to access $262.3 million in critical financing. This decision comes at a crucial time as Ethiopia works through debt restructuring negotiations with both official creditors and bondholders.

A staff-level agreement was reached on May 30, laying out "strong results" from the program aimed at stabilizing the economy. The approval coincides with the finalization of a Memorandum of Understanding on debt restructuring between Ethiopia and its Official Creditor Committee, co-chaired by France and China. The draft deal, initially proposed in March, sets a path for restructuring $8.4 billion in debt and $2.5 billion in debt service relief through 2028.

This complex debt restructuring is part of the broader G20 Common Framework initiative. Despite being in default since December 2023, Ethiopia has shown economic resilience, with notable growth and reduced inflation, according to the IMF. Meanwhile, efforts are underway to address the $1 billion Eurobond, with bondholders opposing principal writedowns but acknowledging liquidity challenges.

(With inputs from agencies.)