Ethiopia creditors to discuss debt restructuring

Ethiopia creditors to discuss debt restructuring
Ethiopia's creditors' committee, co-chared by France and China, will meet next week to restructure the East African country's national debt
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The war in Ukraine had compounded problems facing many developing countries by driving up food [Getty]

Ethiopia's creditors' committee will meet on Monday, a source briefed on the matter said on Tuesday, moving the cash-strapped African country a step closer towards restructuring its debts under a common framework set up by the Group of 20 economies.

The committee, which is co-chaired by France and China, first met in September 2021, but progress on debt relief for Ethiopia has been complicated by a 20-month insurgency that began in the northern Tigray region.

The International Monetary Fund, the World Bank and others are pushing China and private creditors to accelerate work on debt treatments sought by Ethiopia, Chad and Zambia after glacial progress over the past year and a half.

"Ethiopia's creditors will meet on Monday," said the source, providing no further detail.

IMF Managing Director Kristalina Georgieva told Reuters last week it was crucial to jumpstart a process that had failed to deliver a single result thus far, given worsening debt problems facing developing countries and even nations with middle-income economies.

In Tokyo on Tuesday, US Treasury Secretary Janet Yellen on also called for a "orderly resolution of sovereign debt distress."

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The issue will be a focus at this week's meetings of the G20 financial officials in Bali, Indonesia.

John Denton, secretary general of the International Chamber of Commerce, warned G20 finance ministers that, according to recent private sector estimates, more than two dozen countries were at risk of defaulting in 2022.

The war in Ukraine had compounded problems facing many developing countries by driving up food, fertiliser and energy prices, Denton said in a letter addressed to the ministers.

"We see a real risk of solvency problems creating a systemic developing country debt crisis," Denton wrote. "This must be avoided at all costs given the severe downside risks such a scenario would create for trade and the global economy as a whole."