(KOBA FINANCES) – Ethiopia has decided to reopen negotiations on the restructuring of its $1 billion Eurobond, according to an official statement released by the Ministry of Finance on Friday, January 30. The move marks a significant turning point in the country’s financial discussions.

The decision follows a detailed review by the Official Creditor Committee (OCC), which concluded that the preliminary agreement reached earlier did not fully meet the principle of comparability of treatment. This principle requires a fair distribution of the financial burden among all creditors, ensuring balance and equity in the debt restructuring process.

Earlier this year, Addis Ababa announced a preliminary deal with private investors on the main financial terms of the Eurobond maturing in 2024. However, implementation of that agreement depends on approval from bilateral lenders represented by the OCC. Without their endorsement, the deal cannot move forward, underscoring the complexity of the process and its importance for Ethiopia’s financial stability.

The government has stated that it cannot implement the restructuring terms outlined in the preliminary agreement, as they conflict with the official debt framework agreed with the OCC in July 2025. Authorities warned that adopting those conditions would pose serious risks to macroeconomic stability and undermine hard-won economic progress.

Ethiopia first sought debt restructuring in 2021 under the G20 Common Framework, well before defaulting on its sole Eurobond in December 2023. The government engaged in intensive talks in hopes of securing an IMF support program. However, the IMF conditioned its approval on firm commitments from development partners and credible guarantees to ensure the viability of the process.

Progress on debt relief has been slow, hampered by multiple factors, including the devastating conflict that erupted in November 2020 between the central government and rebel groups in Tigray. In July 2025, Addis Ababa reached a landmark deal with official creditors to restructure $8.4 billion in debt, freeing up more than $3.5 billion for essential public investments.

Despite these efforts, the IMF continues to assess Ethiopia’s debt as unsustainable, citing prolonged breaches of external debt indicators relative to exports and a weak debt-carrying capacity. The institution stresses that a comprehensive and effective debt treatment is critical to meet urgent financing needs, revive key development projects, and restore long-term economic stability.