Addis Ababa, Ethiopia – January 30, 2026 — The Government of Ethiopia has announced a major setback in its ongoing sovereign debt restructuring process, with official creditors deeming the current Eurobond deal terms non-compliant with international fairness standards, stalling implementation of the plan agreed earlier this month.

Official Creditors Push Back on Deal

The Ministry of Finance said in a press release that the Official Creditor Committee (OCC) — which represents Ethiopia’s bilateral lenders under the G20 Common Framework — has concluded that the Agreement in Principle (AIP) reached on 2 January 2026 with a group of private bondholders does not satisfy the “Comparability of Treatment” principle. This principle requires that private and official creditors share the burden of debt relief equitably.

As a result, Ethiopia said it is not in a position to proceed with implementing the agreed Eurobond restructuring terms, as doing so would contradict the Memorandum of Understanding signed with the OCC in July 2025 and risk derailing recent macroeconomic gains achieved through reforms supported by the International Monetary Fund (IMF).

Setback Follows Initial Deal With Bondholders

The AIP — negotiated with an Ad Hoc Committee of institutional bondholders representing more than 45 % of the US$1 billion 6.625 % Notes due 2024 — was initially seen as a breakthrough toward resolving Ethiopia’s sovereign default, which began in late 2023 when the government missed coupon payments.

Under the preliminary terms, bondholders agreed to a principal haircut and an exchange into new debt instruments with extended maturities and alternative payment structures — including Value Recovery Instruments tied to future economic performance.

Reopening Negotiations

Following the OCC’s assessment, Addis Ababa said it will re-engage with the Ad Hoc Committee to continue negotiations on the financial terms of the restructuring. The government reiterated its commitment to a deal that is:

• Consistent with the Comparability of Treatment principle, ensuring fair burden-sharing across creditor groups.
• Aligned with Ethiopia’s IMF program, which underpins macroeconomic stability and ongoing reforms.
• Capable of securing broad support from both private and official creditors. (Federal Ministry of Education Ethiopia)

Officials expressed regret at reopening talks but emphasized the necessity of securing a deal that supports long-term financial sustainability without jeopardizing macroeconomic progress.

Market and Economic Implications

The impasse could delay Ethiopia’s return to international capital markets and complicate ongoing efforts to lock in credible debt relief. Analysts suggest private investors may be asked to absorb deeper losses or accept more stringent terms to satisfy the Comparability requirement.

The interruption comes alongside continued reporting from the IMF on Ethiopia’s economic performance, including continued support under an Extended Credit Facility that aims to strengthen fiscal policy and structural reforms.

Background

Ethiopia first sought comprehensive external debt restructuring under the G20 Common Framework in early 2021, and only reached a Memorandum of Understanding with official creditors on bilateral debt treatment worth more than US$3.5 billion in mid-2025.