Ethiopia Initiates Talks with China
(MENAFN) Ethiopia has started discussions with China to convert part of its $5.38 billion debt into loans denominated in yuan.
This move is part of the Ethiopian government's strategy to reduce foreign-exchange pressure and strengthen economic relations with Beijing.
As reported by a media outlet on Monday, Eyob Tekalign, the governor of the National Bank of Ethiopia, mentioned that talks took place in Beijing last month between Ethiopian officials and representatives from the Export-Import Bank of China, as well as the People’s Bank of China.
The discussions centered around payments, trade facilitation, and the restructuring of Ethiopia’s debt.
“China is a very important partner for us now… It really makes sense to arrange some currency swap … we’ve requested officially and then working on it,” Eyob shared with the media outlet on Friday after attending the International Monetary Fund’s annual meetings in Washington.
This initiative follows a similar action taken by Kenya.
Earlier in the month, Nairobi completed the conversion of three China-funded railway loans from US dollars to yuan, a move the Finance Ministry claims will reduce interest payments by approximately $215 million annually.
Additionally, Nigeria renewed a currency swap agreement worth 15 billion yuan ($2 billion) with the People’s Bank of China in December 2023, aimed at facilitating naira-yuan trade settlements.
Ethiopia has been under significant economic strain due to the impacts of the COVID-19 pandemic and a devastating two-year civil war in the Tigray region, which concluded in 2022.
In December 2023, the country defaulted on its sole $1 billion international bond but has since secured a debt relief agreement with official creditors under the G20 Common Framework, co-chaired by France and China, which will provide over $3.5 billion in cash-flow relief.
However, separate negotiations with bondholders have reportedly faced challenges.
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