Ethiopia agreed a preliminary deal with key lenders to restructure its $1 billion international bond, its finance ministry said. The agreement moves Africa’s second-most populous country closer to resolving its longstanding debt crisis.
The country defaulted on the bond in Dec. 2023 and the deal marks a breakthrough after a lengthy restructuring process. A previous deal, struck in Jan. 2026, collapsed when official creditors raised objections, and bondholders rejected a revised offer in late May. Ethiopia’s debt restructuring has become a test case for the G20 Common Framework and highlighted how tensions between official and private creditors can delay wider economic recovery.
Restructuring the country’s debt is a key step in realizing Prime Minister Abiy Ahmed’s bid to liberalize Ethiopia’s economy, because it would help to restore investor confidence and reduce financing costs.