The long-awaited news became official on Tuesday December 26: Ethiopia has defaulted on its debt. The country has defaulted on its last payment of $33 million, corresponding to the repayment of interest on a bond issue. After missing the deadline, the country was granted a grace period, which expired on Monday December 25.
It is the third African country to default on its debt since 2020, along with Zambia and Ghana. Ethiopia, which should have honored this payment on December 11, benefited from a grace period of 14 days, written into the terms of the international government bond to which the country has subscribed. This obligation totals one billion dollars and matures at the end of 2024. At the beginning of December, Africa’s second most populous country announced that it would not be able to honor this new tranche of 33 million euros.
On December 22, the last international banking day, the country’s private creditors noted that they had not received any payment. The Ethiopian government would like to reach an agreement with the private bondholders, after having reached an agreement with its bilateral creditors at the end of November.
Ethiopia has obtained a provisional suspension of debt servicing to the tune of 1.5 billion euros for two years, provided that loan negotiations with the International Monetary Fund are concluded by March 2024.
Ethiopia’s economy has been hard hit by the Covid-19 crisis, combined with the consequences of the civil war in Tigray, and continues to suffer from the ongoing conflict in the Amhara region.