Ethiopia will save $4.9 billion following the conclusion of the debt restructuring process

After completing its current restructuring effort, Ethiopia expects its creditors to agree to restructure $4.9 billion in debt, according to State Finance Minister Eyob Tekalign’s statement on Friday.

The declaration is made as the government resumes its long-overdue debt restructuring in response to the approval of a new IMF financing package.

As per the agreement reached at the end of the previous month, Ethiopia would receive $3.4 billion in funding from the IMF for a four-year program.

It was revealed a few hours after the nation floated the birr, its national currency, and accepted one of the main recommendations made by the fund.

Since then, negotiations to lessen Ethiopia’s debt repayment load have been renewed. Ethiopia is the largest economy in East Africa.

According to the finance minister, the administration hopes to conclude an agreement with every creditor nation in the upcoming months.

In March of this year, Ethiopia’s total external debt was more than $28 billion. The $1 billion Eurobond accounts for over 90% of the debt, with private creditors holding only around 5% of the total.

In a televised speech on Thursday, Prime Minister Abiy Ahmed outlined recent macroeconomic changes, including as the deregulation of currency rates and the creation of a new framework for monetary policy based on interest rates.

He justified the move on Monday to a foreign currency rate set by the market, claiming that the goal was to reduce the difference between the official and black market prices.

Since then, the currency has dropped 31.5% compared to the dollar, raising concerns among some economists that inflation may spike.

At least two local governments have taken aggressive action against stores that raise prices due to concerns about the policy’s inflationary effect on low-income residents.

According to the government and its creditors, the liberalization would increase long-term growth and enable the private sector to contribute more to the economy.