Ethiopia Reaches Debt-Treatment Resolution With China
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Ethiopia’s finance ministry said on Friday it had reached an agreement with China on debt treatment, reaffirming both countries’ commitment to move ahead under the G20 Common Framework toward a formal bilateral deal. The announcement marks another step in Ethiopia’s long-running effort to restructure external debt after its default.
The ministry said the two sides reached the resolution during a meeting between Ethiopian and Chinese finance ministers in China. Discussions covered debt restructuring, implementation of ongoing projects and new financing opportunities, including plans for Bushoftu International Airport.
The agreement matters because Ethiopia still faces legal pressure from bondholders who are preparing to sue the government after resistance from bilateral creditors to a preliminary deal on its $1 billion Eurobond. Those disputes could prolong Ethiopia’s exit from external debt default.
Ethiopia first announced in 2021 that it would restructure sovereign debt under the G20 initiative after the COVID-19 pandemic hit its finances, and it defaulted on its $1 billion Eurobond in 2023 after missing a $33 million coupon payment. The latest deal with China suggests progress, but the restructuring remains incomplete until the bilateral agreement is formalised.
The Chinese agreement also comes alongside broader infrastructure and financing talks, showing that debt restructuring is being tied to future investment plans rather than only repayment terms. For Ethiopia, that keeps the focus on restoring debt sustainability while trying to maintain access to new funding for development projects.
