By Jorgelina do Rosario and Rachel Savage
WASHINGTON/JOHANNESBURG (Reuters) – The delay in Ethiopia’s debt restructuring due to the failure of a new global mechanism to deal with debt problems is “disappointing”, the country’s finance minister said. the East African country said on Saturday, adding that he planned to raise it with the head of the IMF later in the day.
Africa’s second most populous nation requested a debt restructuring under the Common Framework Group 20 process in early 2021, but progress has been complicated by a civil war that broke out in November 2020 and has delaying progress with creditors in paying debts.
Ethiopia’s State Finance Minister Eyob Tekalign Tolina also acknowledged the war was a major factor in the delay and said he hoped for peace talks in the “next few weeks” in an interview. with Reuters on the sidelines of the International Monetary Fund- World Bank Annual Meetings in Washington.
The conflict pits Ethiopia’s federal government against forces in the region led by a party that once dominated national politics. Thousands of civilians were killed and millions were uprooted because of the violence.
“It’s disappointing that it stuck,” Eyob said of the Common Framework. “We trusted the fund and we trusted the G20 countries.”
Ethiopia’s bilateral creditors, co-chaired by France and the largest creditor China – which Eyob said is represented by China Eximbank – have requested debt relief in August, but further progress is required. an IMF agreement.
France and China have “done a commendable job in navigating this difficult road,” Mr Eyob said.
He said Ethiopia was asking for “special access” to the IMF funding more than 100% of its subsidies, but declined to say exactly how much.
“I think the (IMF) board will see that the government has done everything in its power to resolve this conflict peacefully,” he said. “As you know, we have called for the AU process, the AU-led peace talks, which are now progressing.”
Diplomatic sources said peace talks that were supposed to be the first formal talks between the two sides were scheduled for late last week, but were delayed for logistical reasons, sources said. diplomatic news said.
“Ethiopia doesn’t have a solvency problem, it’s a more short-term liquidity problem,” Eyob said, adding that there was no risk of the country defaulting.
He declined to specify the amount of debt the country requested, saying the IMF still needs to complete a Debt Sustainability Analysis, which is the basis of the debt restructuring.
Eyob said he expects the DSA to be completed by November.
The IMF did not immediately respond to a request for comment.
Eyob said the Ethiopian government plans to finish figuring out how to liberalize the banking sector this year, adding that about a dozen European and African banks have expressed interest. .
GDP growth is “more than 6%” in the year to July 2022, and the forecast is 9.2% for 2023, Eyob said, he said.
The East African nation has long experienced foreign exchange shortages, with the IMF forecasting its reserves to fall from 1.5 months of imports in 2021 to 0.7 this year.
The birr this week traded at $90-1 on the black market, compared to 53 in the bank.
“We’ve said very clearly, we want to reform our forex regime,” Eyob said. “So exchange rate unification remains one of the key policy goals, but we’re just doing it gradually.”
