- Ethiopia failed to fulfil a $33 million (KSh 5.1 billion) interest payment on the Eurobond that was due on December 11
- Ethiopia joined a growing cohort of developing countries grappling with Eurobond defaults, such as Zambia, Ghana, and Sri Lanka
- Ethiopia is looking to renegotiate the maturity period of the loan along with a reduction in the coupon rate from 6.625% to 5.5%
PAY ATTENTION: We Need your Opinion! What do You Think about this Website? Take 5-min Poll and Make TUKO Better Now.
Elijah Ntongai, a journalist at TUKO.co.ke, leverages more than three years of expertise in financial, business, and technology research, providing insights into both Kenyan and global economic trends.
Ethiopia marked its name among African nations that have defaulted on international loans after failing to fulfil a $33 million (KSh 5.1 billion) interest payment on the Eurobond that was due on December 11, 2023.
The government was unable to make the payments even within the two-week grace period that was given after the due date on December 11.
Senior reform advisor Hinjat Shamil confirmed that the payment remained outstanding and would not be made.
PAY ATTENTION: Click “See First” under the “Following” tab to see TUKO News on your News Feed
This move places Ethiopia alongside a growing cohort of developing countries, including Zambia, Ghana, and Sri Lanka, grappling with Eurobond defaults in recent years.
Finance Minister Ahmed Shide conveyed on state television that Ethiopia's decision to withhold the payment stemmed from its commitment to treat all creditors equally.
What Ethiopia wants
In a counterproposal for debt restructuring, Ethiopia sought to extend the maturity period from July 2028 to January 2032, along with a reduction in the coupon rate from 6.625% to 5.5%, while maintaining the bond's face value at $1 billion, aiming to avoid any 'haircut' on creditors' holdings.
However, an ad hoc committee of bondholders expressed discontent, deeming Ethiopia's decision to withhold payment as unnecessary and unfortunate, according to a report by Bloomberg.
Striving to renegotiate its obligations, Ethiopia seeks recourse through the G20 Common Framework for Debt Treatments, following in the footsteps of Zambia and Ghana, which have made strides in restructuring their debts.
Ethiopia's struggle to rework its financial obligations dates back to 2021, when a civil war in the northern Tigray region adversely impacted investor sentiment and economic growth.
Kenya set to repay loans
Meanwhile, President William Ruto affirmed Kenya's commitment to repay $300 million (KSh 46.4) of a $2 billion (KSh 309.9) Eurobond due June 2024.
Kenya's approach draws attention due to concerns surrounding its growing debt, currency depreciation, and escalating yields, which affect many frontier economies.
"I can now confirm... with confidence that we will and we shall pay the debt that has become a source of much concern to citizens and markets," President Ruto stated in his State of the Nation address to parliament.
PAY ATTENTION: Help us change more lives, join TUKO.co.ke’s Patreon programme.
Meet Bella Ramsey's Parents: All About The 'Last Of Us' Star's Family
Nyandarua MCA Celebrates New Year With Arrival Of Newborn: "We Are Blessed"
YouTuber Thee Pluto Affirms He's Still Muslim, Visits Huge Mosque In Uganda