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12 Dec, 2023 13:50

BRICS candidate likely to default – media

Ethiopia has reportedly missed a deadline for paying a $33 million bond coupon
BRICS candidate likely to default – media

Ethiopia will hold a call with its international bondholders later this week after the African nation failed to pay a $33 million bond coupon that was due on Monday, according to a senior finance ministry official, as quoted by Reuters.

Last week, the finance ministry said the country’s efforts to renegotiate the bond terms before the deadline for the coupon payment had fallen through. The sides had reportedly disagreed over how long to extend the maturity and spread out repayments of its single $1 billion international bond maturing in December 2024 .

After the grace period of 14 days expires, the East African nation is expected to become the latest emerging-market sovereign to default on its debt, unless Addis Ababa successfully restructures it in time.

Zambia, Ghana and Sri Lanka have defaulted on Eurobonds in recent years. Tunisia, Pakistan and Bolivia are also currently at risk, Bloomberg reported, citing bond market pricing.

Ethiopia, which requested a debt overhaul under the G20 Common Framework in early 2021, had managed to service interest payments on its international bond until now.

According to the statement issued by the Ethiopian finance ministry, the nation will seek a “broadly similar treatment” from bondholders.

“It would be important to treat all our creditors equitably,” the ministry said.

Meanwhile, State Minister of Fiscal Policy and Public Finance Eyob Tekalign Tolina told Reuters that the “authorities’ intention is to remain current on our obligations.”

According to Tolina, there will be a call with investors holding the international bond on Thursday.

Ethiopia, which was severely hit by the aftermath of the coronavirus pandemic and a military conflict in its northern Tigray region, is currently struggling to pay its debts. The nation is also seeking a four-year loan from the International Monetary Fund.

Ethiopia will become a member of BRICS on Jan 1. The invitation to join was approved in August and extended to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. The group currently consists of Brazil, Russia, India, China, and South Africa.

For more stories on economy & finance visit RT's business section

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