NAIROBI (Reuters) – Ethiopia is updating its debt sustainability assessment with International Monetary Fund help and will then talk to official creditors, its finance ministry said in an apparent attempt to allay market concerns over a possible restructuring of sovereign debt.
On Friday, a Finance Ministry official told Reuters that Ethiopia planned to seek a restructuring of its sovereign debt under a new G20 common framework and was examining all available options.
This pushed its government bonds to their biggest ever daily fall and analysts said restructuring concerns could spill over to hit other borrowers.
The ministry said in a statement on Monday that once the discussions with official creditors were complete, it will inform other creditors of the need for broader debt treatment.
It also said it was confident that possible implementation of debt treatment under a new G2 framework will address vulnerabilities and preserve long-term access to international financial markets.
Under the new G20 framework, debtor countries are expected to seek an IMF programme to put their economies onto a firmer footing and negotiate a debt reduction from both public and private creditors.
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Ethiopia has a $1 billion dollar bond outstanding, though only $66 million worth of interest payments on the issue are coming due this year.