Ethiopia’s efforts to restructure its USD 1 billion Eurobond debt have suffered a major setback after its Official Creditors Committee (OCC) rejected an agreement in principle (AIP) reached earlier this month with private bondholders.
In a letter addressed to Finance Minister Ahmed Shide, OCC co-chairs Yang Jing and Thomas Revial said the proposed agreement is inconsistent with the official debt restructuring framework outlined in the Memorandum of Understanding (MoU) signed between Ethiopia and the OCC in July 2025.
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The rejected AIP included a 15 percent haircut on the Eurobond, the issuance of a new USD 850 million bond maturing in 2029, and a USD 350 million principal repayment due in July 2026.
According to the OCC, the deal violates the “comparability of treatment” principle, which requires that all creditor groups bear a fair and comparable share of the debt restructuring burden.
“After careful consideration of the agreement in principle (AIP), the OCC considers that it is not compliant with the principle of comparability of treatment and the MoU agreed with Ethiopia,” the letter states. The committee added that, given Ethiopia’s relatively favorable macroeconomic outlook, the proposed terms would result in “a very low restructuring effort from the bondholders,” making the agreement unfair to other creditors.
The OCC further warned that proceeding with the deal under the current terms could pose risks to Ethiopia’s macroeconomic stability and undermine recent economic progress.
The decision effectively halts Ethiopia’s attempt to restructure its Eurobond, on which the country defaulted in late 2024, as part of a broader effort to address debt distress under the G20 Common Framework and an ongoing IMF-supported reform program.
Despite the setback, Ethiopian authorities say they remain committed to reaching an agreement.
“While Ethiopia regrets the need to reopen discussions, it remains fully committed to working constructively and in good faith with the members of the Ad Hoc Committee and its official creditors to reach a solution,” the Ministry of Finance said in a statement.
The OCC indicated that it remains open to continued engagement with the Ethiopian government, provided any revised proposal aligns with the comparability of treatment principle and Ethiopia’s commitments under its IMF program.
