Ethiopia has become the latest African nation to default in recent years, having failed to make a $33 million interest payment on its only international government bond after a 14-day grace period expired earlier this week.
The East African country had been scheduled to pay the bond coupon on December 11, but a two-week grace period allowed it until Monday to do so before officially defaulting.
The country's finance ministry previously announced that Addis Ababa's efforts to renegotiate the bond terms prior to the payment deadline had failed. The parties were said to have disagreed on how long to extend the maturity and spread out repayments on the single $1 billion international bond, which is due to mature in December 2024.
Last Thursday, Ethiopia’s finance minister Ahmed Shide said the government did not want to make the payment because it “wants to treat all creditors in the same way,” Bloomberg reported, citing state TV.
Hinjat Shamil, senior reform advisor at the Ministry of Finance, also told Bloomberg on Monday that the payment “had not and will not be made.”
Addis Ababa requested debt restructuring under the G20 Common Framework in early 2021 and had been able to service interest payments on its international bond, until now.
Africa’s second most populous nation has now joined a growing list of developing countries that have defaulted on Eurobonds in recent years, including Zambia, Ghana, and Sri Lanka.
Ethiopia has been under severe economic pressure as a result of the coronavirus pandemic and a two-year brutal civil war in the country's northern Tigray region, which ended a year ago.
Last month, Addis Ababa reached an agreement in principle with its bilateral creditors, including China, on an interim debt-service suspension.
The African state, which will join the BRICS group, currently comprising Brazil, Russia, India, China, and South Africa, in January, is additionally seeking a four-year loan from the International Monetary Fund.
Ethiopia's admission to the BRICS has been described by Prime Minister Abiy Ahmed as a turning point for the East African country's economy.