Chinese government to restructure Ethiopia’s debt
Repayment of railway debt extended
Prime Minister Abiy Ahmed (PhD) on Thursday disclosed that the Chinese government has agreed to restructure some of Ethiopia’s debt, including a USD four billion loan for a railway that stretches from Addis Ababa to Djibouti.
According to the Prime Minister, the repayment of the railway debt has been extended from the original schedule of 10 years to 30 years.
Upon his return home from his visits to China and Eritrea, PM Abiy told reporters that he had held successful discussions with officials of the Chinese government over his country’s debt.
“During our stay, we had the opportunity to enact limited restructuring of some of our loans,” he said while briefing reporters in Addis Ababa. “In particular, the loan for the Addis Ababa-Djibouti railway which was meant to be paid over 10 years has now been extended to 30 years.”
The deal was made amid rising concerns over debt distress, with the Ethiopian government’s debt reaching 59 percent of the country’s annual Gross Domestic Product (GDP), according to official figures.
Though the Addis Ababa link with Djibouti which handles roughly 95 percent of all inbound trade for Ethiopia is complete, the line’s extension to its north has faced delays owing to a lack of funding.
In addition to Djibouti, Ethiopia is also in discussions with neighboring Eritrea, Sudan and Somalia to expand its options for sea access. It has negotiated deals with Djibouti and Sudan to hold equity in their ports.