Gov’t Welcomes Step Taken by Creditor Committee for Debt Treatment Under G20 Framework

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Addis Ababa September 22/2021 (ENA) Ethiopia welcomed the step taken by the Creditor Committee for a debt treatment under the G20 Common Framework to enable the timely delivery of the debt operation, Ministry of Finance said.
The G20 Common Framework meeting was held successfully on September 16, 20121.

In a press conference today, State Minister of Finance Eyob Tekalgn said the government of Ethiopia has attended the virtual meeting and presented Ethiopia’s case on the overall macro reform, and the need for the debt restructuring.

“We are pleased with the commitment shown by the Creditor Committee to support Ethiopia in its endeavor to provide debt treatment tailored to the needs of the economy, as a foundational step towards ensuring macro-economic stability,” the state Minister said.

He particularly expressed gratitude for the work done so far by the co-chairs of the creditor committee, France and China for their tireless effort to form the committee and the opportunity extended to the Government of Ethiopia to attend the virtual meeting and present its request.

“This action will provide liquidity relief from the economic challenges created by the COVID-19 pandemic and help establish the fiscal space needed to meet Ethiopia’s development and social spending needs, while lowering the risk of debt distress rating to moderate by reprofiling debt service,” he said.

He further reiterated Ethiopia’s commitment to work with its creditors to finalize the details of the debt treatment.

The steadfast commitment of the Government of Ethiopia to implement the nation’s Homegrown Economic Reform Plan is resulting in a resilient economy with a stable growth path, it was indicated.

“Our achievements include a prudent and proactive macroeconomic management, a sustainable public debt management system, an improved business environment for greater private sector participation, enhanced performance of public enterprises, improved export performance, as well as increased revenues and measured expenditures.”

Ethiopia’s Ministry of Finance recognized the important support of the International Monetary Fund (IMF) to Ethiopia’s reform process under the Extended Credit Facility (ECF)/ Extended Fund Facility (EFF) arrangement program.

The IMF’s continued engagement in Ethiopia will be critical as the program supports Ethiopia’s economic recovery after COVID-19 related shocks, while safeguarding the delivery of resources to vulnerable groups.

The technical assistance by the IMF supporting fiscal, monetary, and financial sector policy reforms have also been highly beneficial in strengthening the performance of Ethiopia’s  economy, the state Minister said.  

He stated that “Extended Credit Facility (ECF) still active but to replace expired component of Extended Fund Facility (EFF) we have already requested forward and now the IMF is working on the new Debt Sustainability Analysis (DSA) to inform the creditor committee amount of debt structure required to put Ethiopia on sustainable macro path.”

Despite the technical expiry of the ECF component of the program, the EFF will continue to be active and we have requested a new ECF arrangement that will give us access to concessional Poverty Reduction and Growth Trust (PRGT) resources, replacing the expired component.

Furthermore, he stressed that Ethiopia is working to improve overall Ethiopia’s debt status and bring Ethiopia from high distress to medium and the medium to low the distress level.