Ethiopia plans to restructure an additional $ 1 billion in debt as the government seeks to free up funds to support its economic recovery.

The debt restructuring will provide a grace period of up to six years and extend the maturity by 10 years, the finance ministry said in a report on its website. “$ 2.5 billion in principal and interest payments deferred for five years by commercial creditors as part of the first external debt restructuring scheme, “according to the report.

The announcement comes after Ethiopia in January asked to rework its debt under the Group of 20 common framework, an initiative to secure debt relief for poor countries to all creditors, including China and the United States. commercial lenders.

The restructuring plan of at least $ 1 billion more does not include Eurobonds, Finance Minister Eyob Tekalign said by telephone on Wednesday.

G-20 request

Separately, the International Monetary Fund on Tuesday urged Ethiopia to quickly create a creditors committee to support the country’s debt plans.

The IMF said in February it supported Ethiopia’s decision to rework its debt under the G-20 agenda, as this would strengthen debt sustainability and boost the country’s efforts to recover from the pandemic. of coronavirus. Along with sovereign debt, Chinese loans and other official credits, Ethiopia is seen as a key test for the G-20 push to avoid a multitude of defaults in the developing world.

“The IMF strongly encourages the early formation of the Ethiopia creditors committee to enable the timely delivery of the debt operation Ethiopia is requesting” within the common framework of the G-20, the spokesperson said. IMF said Gerry Rice in an emailed statement. The committee will support Ethiopia’s plan to create fiscal space for development spending and reduce the risk of reprofiling debt service obligations, the statement said.

READ: Ethiopian Eurobonds plunge as nation seeks to review G-20 debt