by Jorgelina do Rosario and Rachel Savage

WASHINGTON/JOHANNESBURG (Reuters) – The delay in restructuring Ethiopia’s debt due to the failures of a new global mechanism to solve debt problems is “disappointing”, the East African country’s state finance minister said on Saturday, adding that he plans to extend it. Planned. The head of the IMF later in the day.

Africa’s second most populous country requested debt restructuring under the Common Framework Process of the Group of 20 in early 2021, but progress has been complicated by the civil war that broke out in November 2020 and delayed progress with creditors on debt exercise happened.

Ethiopia’s State Finance Minister Iob Teklign Tolina acknowledged that war was also a significant factor in the delay, and said he expected peace talks in “the coming few weeks” in an interview with Reuters on the sidelines of the International Monetary Fund. The annual meeting of the World Bank will be held in Washington.

The conflict pitted the federal government of Ethiopia against regional forces led by a party that dominated national politics. Thousands of civilians have been killed and millions have been uprooted by the violence.

“It’s absolutely disappointing that it’s stuck,” Aib said of the Common Framework. “We trusted the fund and we trusted the G20 countries.”

Ethiopia’s bilateral creditors co-chaired by France and the largest creditor China – which the AOB said was represented by China Exhibank – recommended debt relief in August, but the IMF deal needed further progress. the wanted.

France and China have “done an admirable job in navigating through this difficult journey,” Iob said.

He said Ethiopia was requesting “extraordinary access” to IMF funding of more than 100% of its allowance, but declined to say exactly how much.

“I think the (IMF) board will see that the government has done everything in its power to resolve this conflict peacefully,” he said. “As you know, we are calling for the AU process, the AU-led peace talks, which are now moving forward.”

Diplomatic sources said the peace talks, which would have been the first formal talks between the two sides, were scheduled last weekend, but were delayed for logistical reasons.

“Ethiopia is not a solvency issue, it is a short-term liquidity issue,” Iob said.

He declined to specify how much debt relief the country needs, saying the IMF still needs to finish a debt stability analysis, which forms the basis for debt restructuring.

Iob said he expects the DSA to be finalized in November.

The IMF did not immediately respond to a request for comment.

Iob said Ethiopia’s government planned to finish work on how it would liberalize its banking sector this year, with about a dozen European and African banks expressing interest.

He said GDP growth was “over 6%” by July 2022, and the forecast is 9.2% for 2023, Iob said.

The East African country, which has experienced a prolonged foreign exchange crunch, has projected its reserves to fall from 1.5 months of import cover in 2021 to 0.7 this year.

Bir was trading 90 to $1 in the black market this week, compared to 53 at the banks.

“We have made it very clear, we want to improve our forex regime,” Iob said. “So exchange rate integration remains an important policy goal, but we’re only doing it slowly.”

Source: Reuters