Ethiopia Welcomes its Creditors’ Committee First Meeting on Sept. 16

ADDIS ABABA – The Ministry of Finance has welcomed Ethiopia’s creditors’ committee first meeting  in a bid to restructure its debts under under the Group 20 (G20) Common Framework.

Ethiopia requested in February to G20 and Paris Club creditors to benefit from a debt operation under the G20 Common Framework.

Authorities’ aim is to create fiscal space for development spending and lower the risk of debt distress rating to moderate by re-profiling debt service obligations.

“Ethiopia welcomes the important step taken by the Creditor Committee for a debt treatment under the G20 Common Framework to enable the timely delivery of the debt operation during its September 16 meeting,” said the ministry in a statement issued on Wednesday.

The government is “pleased with the commitment” shown by the Committee to support Ethiopia in its endeavor to provide debt treatment tailored to the needs of the economy.

It is “a foundational step towards ensuring macro-economic stability,” the Ministry said.

“This action will provide liquidity relief from the economic challenges created by the COVID-19 pandemic and help establish the fiscal space needed to meet our development and social spending needs, while lowering the risk of debt distress rating to moderate by reprofiling debt service,” the statement reads.

The government has reiterated its commitment to work with its creditors to finalize the details of the debt treatment. Ethiopia is currently implementing its Homegrown Economic Reform Plan, which, the ministry of finance said, is resulting in a resilient economy with a stable growth path.

Seeks IMF deal

The East African nation has also recognized the support of the International Monetary Fund (IMF) providing to Ethiopia’s reform process under the Extended Credit Facility (ECF)/Extended Fund Facility (EFF) arrangement program.

“The IMF’s continued engagement in Ethiopia will be critical as the program supports Ethiopia’s economic recovery after COVID-19 related shocks, while safeguarding the delivery of resources to vulnerable groups,” the statement reads.

According to the ministry, the technical assistance by the IMF supporting fiscal, monetary, and financial sector policy reforms have also been highly beneficial in strengthening the performance of Ethiopia’s economy.

“Despite the technical expiry of the ECF component of the program, the EFF will continue to be active and we have requested a new ECF arrangement that will give us access to concessional Poverty Reduction and Growth Trust (PRGT) resources, replacing the expired component,” said the ministry.

“We look forward to discussing the modalities of IMF engagement going forward and appreciate the continued support by our international partners for the implementation of our Homegrown Economic Reform Program,” the statement concludes.