Creditor’s committee

Will China & France’s bilateral initiative manage Ethiopia’s debt?

By Loza Seleshie

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Posted on October 4, 2021 13:28

Ethiopia’s Prime Minister Abiy Ahmed attends the launch of a mobile phone-based financial service named Telebirr mobile money service, in Addis Ababa © Ethiopia’s Prime Minister Abiy Ahmed attends the launch of a mobile phone-based financial service named Telebirr mobile money service, in Addis Ababa, Ethiopia May 11, 2021. REUTERS/Tiksa Negeri
Ethiopia’s Prime Minister Abiy Ahmed attends the launch of a mobile phone-based financial service named Telebirr mobile money service, in Addis Ababa, Ethiopia May 11, 2021. REUTERS/Tiksa Negeri

Amidst a complex internal and global context, Ethiopia had requested to restructure parts of its debt in February 2020 under the G20 Common Framework (DSSI). After much stalling, a creditor’s committee was formed on 16 September 2021. Headed by France and China, could such a bilateral initiative create a precedent in the global management of debt? What challenges lay ahead?

The G20 Debt Service Suspension Initiative (DSSI) aims to ‘temporarily ease the financing constraints’, with the IMF and World Bank providing technical assistance. Ethiopia, like many African countries, is facing two debt management structures: the Paris Club (IMF and World Bank (WB) included) and China’s frameworks. The establishment of a Creditor’s Committee headed by France and China signals a step towards a bilateral management of debt.

“It is a good omen and we can hope for a restructuring that is tailored to the particular situation of each country, with more transparency on the amount of debt owed. Mid-term results (3 to 5 years) will also be decisive. If this approach is effective in stabilising public finances, it will also be in the interest of Paris Club members and China to maintain it,” Estelle Prin, China analyst and lecturer in geopolitics at Sciences Po Lyon, tells The

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