Ethiopia wants to transform portion of its debt to yuan
(MENAFN) Ethiopia has launched discussions with China to transform a portion of its $5.38 billion debt into yuan-denominated loans, as the government seeks to relieve pressure on its foreign-exchange reserves and strengthen trade relations.
According to reports, National Bank of Ethiopia Governor Eyob Tekalign confirmed that officials held meetings in Beijing last month with the Export-Import Bank of China and the People’s Bank of China, focusing on payments, trade facilitation, and debt restructuring.
“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 said, commenting after the International Monetary Fund’s annual meetings in Washington.
Ethiopia’s plan mirrors similar steps taken by other African nations. Earlier this month, Kenya converted three China-backed railway loans from US dollars into yuan, a move the Finance Ministry said will lower annual interest payments by roughly $215 million. Nigeria also renewed a 15-billion-yuan ($2 billion) currency-swap arrangement with the People’s Bank of China in December to facilitate naira-yuan trade settlements.
The East African nation has faced severe economic strain due to the coronavirus pandemic and a devastating two-year civil war in the Tigray region, which ended in 2022. Ethiopia defaulted on a $1 billion international bond in December 2023 but has since reached a relief agreement with official creditors under the G20 Common Framework, co-led by France and China, providing over $3.5 billion in cash-flow support. Reports indicate that separate negotiations with bondholders remain complicated.
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