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Ethiopia debt restructuring plan faces hurdles of transparency

By David Whitehouse
Posted on Monday, 8 February 2021 12:31

Ethiopia's Prime Minister Abiy Ahmed Ali, Togo's President Faure Gnassingbe and Benin's President Patrice Talon take part of the 'G20 Compact with Africa' summit at the Chancellery in Berlin, Germany, October 30, 2018. John Macdougall/REUTERS

Ethiopia’s plan to seek debt restructuring under a G20 common framework agreed in November triggered a sell-off in African debt at the end of January on fears of a contagion effect.

The framework enables debtor countries to seek an IMF programme to strengthen their economies and renegotiate their debts with public and private creditors. But such a debt restructuring for Ethiopia would face barriers due a lack of transparency, analysts say.

Any attempt to reconcile balance of payments and published public external debt figures with underlying debt-creating flows shows information gaps and supports “a narrative of opaque lending”, argues Irmgard Erasmus, senior financial economist at NKC African Economics in Cape Town.

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