Ethiopia aims to complete debt restructuring with commercial creditors by October 2026

The Ethiopian government has set an October 2026 deadline to finalize all bilateral and commercial debt restructuring agreements. This is reportedly a critical concluding phase in the country’s multi-year journey toward achieving macro-economic stability.

According to the Ministry of Finance, Ethiopia—which has been navigating the process under the G20 Common Framework—is aggressively implementing a “comparable treatment” strategy.

This principle requires private creditors and commercial banks to provide debt relief equivalent to the terms granted by official bilateral creditors.

Following an agreement with the International Monetary Fund (IMF) in July 2024, Ethiopia reached an agreement in principle with the Official Creditor Committee (OCC) in March 2025. This was followed by the signing of a formal Memorandum of Understanding (MoU) in July 2025, which has now been signed by all committee members and the Ethiopian government.

This momentum saw practical progress in early 2026, with France—the committee chair—becoming the first country to sign a separate bilateral agreement with Ethiopia.

Beyond restructuring existing obligations, the deal includes €81.5 million in financial support to bolster the second phase of the Homegrown Economic Reform (HGER 2.0).

While the process with bilateral creditors has remained steady, the focus has now shifted to the commercial sector, which accounts for approximately 10% of Ethiopia’s total external debt.

This sector includes Eurobond holders of the $1 billion note that matured in December 2024, as well as project loans taken by state-owned enterprises, including those from the China Export Credit Agency.

Although negotiations faced challenges because some initial terms proposed by Eurobond holders were inconsistent with the principle of fairness, the Ministry of Finance expressed optimism, noting that agreements in principle have been reached with selected major commercial creditors.

The market-based exchange rate reform launched in July 2024—while essential for long-term economic health—initially increased the cost of servicing external debt in local currency.

According to the Ministry of Finance, despite these pressures, the government has managed to reduce the debt-to-GDP ratio from 56% in 2018 to 37% by the end of 2025 through the use of domestic revenue sources and strict fiscal discipline.