Ethiopia's Ministry of Finance has suspended a memorandum of understanding with private creditors to restructure its $1 billion Eurobond debt. The decision stems from the agreement's failure to adhere to creditors' equality principles, conflicting with commitments to the International Monetary Fund and posing risks to macroeconomic stability. Officials plan new talks to ensure fair debt relief.
On July 2, 2026 (Ethiopian calendar), Ethiopia's Ministry of Finance suspended a memorandum of understanding aimed at restructuring its $1 billion Eurobond debt with a committee of private creditors. This decision followed a review by the government's leaders committee and the International Monetary Fund (IMF), highlighting discrepancies in the deal.
Finance Minister Ahmed Shide stated that the suspension was primarily due to the agreement's non-compliance with the "creditors' equality principle." The creditors' committee had notified the government in writing that the memorandum did not align with the debt relief framework negotiated with other commercial creditors. Furthermore, it conflicted with the Letter of Intent signed with the IMF in June 2025 and failed to match the Fund's economic reform objectives and benchmarks.
According to the ministry, proceeding with the agreement could severely threaten macroeconomic stability and economic growth prospects. As a result, the government has decided to initiate fresh negotiations with the private creditors' committee specifically on debt financing terms. This move aims to achieve equitable debt relief among all creditors while bolstering the country's economic capacity through a sustainable solution.