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Ethiopia to meet bondholders on Thursday as default looms

Published

1 year 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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Moroccan annual inflation rises to 0.8% in November

Published

4 days ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

5 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”