Paris Club pushes Ethiopia’s IMF deal deadline to June

The Paris Club, a group mainly comprising developed country creditors, has extended Ethiopia’s deadline to secure a preliminary bailout deal with the International Monetary Fund (IMF) by three months, now ending in June, Bloomberg reported on Thursday.

This information comes from a confidential source within the club. Ethiopia’s National Bank Governor, Mamo Mihretu acknowledged the extension without confirming specifics. The Paris Club hasn’t yet responded to inquiries.

Ethiopia, which gained a debt standstill agreement with its official creditor committee in November last year, initially had until March’s end to reach an IMF staff-level agreement. Failure to do so would allow the committee to revoke the debt service suspension agreement.

Mihretu mentioned substantial progress during a recent IMF mission to Addis Ababa, expressing hope for further advancement during the IMF Spring Meetings in Washington later this month.

The IMF also noted significant progress in talks toward supporting Ethiopia’s economic programme but didn’t finalise a deal.

In December, Ethiopia joined Zambia and Ghana as Africa’s latest sovereign defaulters, aiming to restructure billions in external debts through the G20’s Common Framework. This framework aims to coordinate discussions between the Paris Club and major new creditors like China.

Ethiopia, facing an $11.5 billion financing gap over four years, plans to cover it with IMF and World Bank funds alongside debt relief, though these amounts are preliminary.

The Paris Club announced a debt suspension from January 2023 to December 2024. Additionally, China agreed to a separate bilateral payment suspension. In December, Ethiopia defaulted on a coupon payment for its $1 billion bonds, citing the need for equitable treatment of creditors.