• Ethiopia and Italy sign bilateral debt restructuring agreement

• Deal follows G20 framework, unlocking over $3.5 billion relief

• Agreement supports reforms amid inflation, forex shortages, debt pressures

Ethiopia and Italy signed a bilateral debt restructuring agreement on Thursday. The deal is the second agreement Addis Ababa has concluded with a member of the Official Creditors Committee (OCC) under the G20 Common Framework. It follows the memorandum of understanding signed in July 2025 between Ethiopia and the OCC, which confirmed an agreement in principle and unlocked more than $3.5 billion in debt relief.

Italian Economy and Finance Minister Giancarlo Giorgetti said the agreement aligns with Ethiopia's macroeconomic reform priorities. It is also part of the Mattei Plan for Africa, Rome's strategic initiative where Ethiopia is a key partner.

Addis Ababa requested external debt restructuring under the G20 framework in 2021. The country subsequently defaulted on its sole euro-denominated bond in December 2023. According to the International Monetary Fund, Ethiopia's debt stood at 50.3% of GDP in 2024/2025.

Ethiopia's economic growth remains robust, estimated at 8.1% for the 2023/2024 fiscal year. The country nonetheless faces significant structural vulnerabilities. Inflation was estimated at 17.5% at the end of September 2024. A persistent shortage of foreign currency is constraining import capacity and weighing on macroeconomic stability.

Addis Ababa has been implementing IMF-supported reforms since 2024 to restore macroeconomic stability and ensure debt sustainability.

Ingrid Haffiny