Bondholders of Ethiopia’s defaulted bond have challenged the latest International Monetary Fund (IMF) report, arguing that it wrongly portrays the country as facing a solvency crisis, which would require debt relief.
The dispute revolves around whether Ethiopia is experiencing a liquidity issue, meaning it only needs more time to repay its debt, or a solvency issue, which could necessitate bondholder losses. The creditor committee dismissed the IMF’s conclusions, stating that the report underestimates Ethiopia’s economic strength, particularly in key export sectors like gold and coffee.
Ethiopia has already proposed an 18% reduction in bondholder repayments. The investor group, which holds over 40% of Ethiopia’s $1 billion bond, warned that it may take legal action in English courts if Ethiopia does not fulfill its debt obligations.