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Ethiopia to meet bondholders on Thursday as default looms

Published

11 months ago

December 11, 2023

A senior official of Ethiopia’s Ministry of Finance has said that the country will hold a call with its international bondholders on Thursday as it heads towards default, having said last week it could not pay a $33 million bond.

Disagreements about the length of time to extend the maturity and spread out the repayments of the ministry’s single $1 billion international bond, which matures in December 2024, caused talks with a group of bondholders to break down last week.

Ethiopia, which asked for debt restructuring under the G20 Common Framework in early 2021, would be headed towards default after the 14-day grace period if the bond coupon is not paid.

Nonetheless, the finance ministry stated in a statement on Monday that it would “seek a broadly similar treatment” from bondholders in light of recently secured debt service suspension agreements with official creditors, including China, and certain commercial lenders.

“It would be important to treat all our creditors equitably,” the ministry said in a statement, which seemed to echo comments last week that a payment was not on the cards.

According to the ministry, the previous bondholder group proposal called for a 6.625% coupon and a much faster amortisation between July 2028 and July 2029.

“The discussion with few bondholders did not bear fruit as we did not agree on terms,” Eyob said.

“We are confident that we can work out a plan that works for both of us and has a good chance of being accepted by the OCC (hence the need for broadly similar treatment),” he wrote, referring to the official creditor committee.

Ethiopia’s economy has been greatly affected by a severe drought, displacement, and increased food insecurity due to conflict over the past few years. According to WFP statistics, 15.1 million people required emergency food assistance in the third quarter of 2023. In 2022, its real GDP growth fell to 5.3% from 5.6% in 2021 but remained above East Africa’s average (4.7% in 2021 and 4.4% in 2022).

Over $316 billion is required to finance Ethiopia’s adaptation (87% of the total) and mitigation (13%) targets for 2021–30. However, only $63.2 billion of financing is expected to be mobilised from domestic sources, with the rest coming from international sources

Related Topics:Bondholders Ethiopia Featured

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Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.