Ethiopia has been forced back to the negotiating table regarding its $1 billion Eurobond, following a formal rejection by official creditors who described a previous tentative agreement with private bondholders as “unacceptably lenient.”
As of today, Friday, 30 January 2026, the Ethiopian government is scrambling to revise its debt restructuring plan to satisfy the “Comparability of Treatment” (CoT) rule, a core requirement of the G20 Common Framework.
The friction stems from a classic “fairness” dispute in sovereign debt restructuring:
In late 2025, Ethiopia reached a preliminary agreement with a committee of private bondholders. This deal reportedly offered bondholders better terms (higher recovery rates) than what the official creditors (bilateral lenders like China and the Paris Club) were willing to accept.
Official creditors argue that they should not be forced to take “bigger haircuts” (losses) while private investors walk away with a better deal. They have demanded that Ethiopia renegotiate to ensure that all creditors share the burden equally.
If Ethiopia cannot bridge this gap, it risks losing critical IMF funding and extending its stay in “selective default” status, which has crippled its ability to attract new foreign investment.
Ethiopia’s economic recovery hinges on resolving this $1 billion hurdle:
IMF Program: A finalized debt deal is a prerequisite for the IMF to release the next tranche of its $3.4 billion support package.
Currency Stability: Uncertainty over the bond deal has put additional pressure on the Ethiopian Birr, which has already seen significant devaluation recently.
Regional Precedent: Investors are watching closely, as Ethiopia’s case will set the tone for how other debt-distressed African nations (like Ghana and Zambia) are handled by the G20 Common Framework.
