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Addis Ababa is Likely to Require a more Comprehensive Package of Debt Restructuring 

For over two years, since Ethiopia first requested debt relief under the G20 Common Framework, the East African country has teetered on the edge of default. Talks with the International Monetary (IMF) to restructure the debt were stalled by the onset of civil war in the Tigray region in November 2020, but since then, Ethiopia’s economic woes have only become more serious. The civil war destroyed whole swathes of industry in Tigray and is estimated to have cost Ethiopia around $20m in monthly export revenues. Inflation, partly driven by the disruption to supply chains caused by the war in Ukraine, is currently running at over 33%. The Ethiopian birr has posted steep declines against the US dollar, weakening by 40% since the start of 2020. A weakening currency, as well as higher interest rates in the US, has pushed up the cost of servicing dollar-denominated debts, which stand at over $43bn. All of these problems are reflected in Fitch Ratings’ assessment of Ethiopia’s creditworthiness.