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Debt treatment -
May 13, 2004

Supporting agreements with the international institutions

Programme supported by an Arrangement under the Poverty Reduction and Growth Facility (PRGF) with the IMF approved on March 19, 2001
Download the IMF report : Letter of Intent

Download the IMF report : Completion Point Document for the Enhanced Heavily indebted Poor Countries (HIPC) Initiative

Total external debt of the country

$6 845 million as of December 31, 2003, representing 277% of GDP.

$1 899 million of which being due to Paris Club as of April 01, 2004

Amounts treated

$1 487 million of which $1 296 million being canceled, of which $191 million being rescheduled

Accorded treatment

Cancellation of Ethiopia's external debt in the framework of the Enhanced Initiative for the Heavily Indebted Poor Countries

Completion point reached on April 20, 2004

Categories of debt treated

Treatment of arrears as of March 31, 2003. Treatment of the stock as of April 01, 2004


Repayment profile

Treatment under HIPC Initiative Exit terms


Specific provisions

Possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each participating creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps: (i) all ODA debts; (ii) the amounts of other outstanding credits, loans and consolidations mentioned in paragraph 1. above, up to 20% of the amounts of outstanding credits as of November 30, 1992 or up to an amount of 20 million SDR, whichever is higher. Participating creditor countries and the Government of Ethiopia will inform semi-annually the Secretariat of the Paris Club, who will inform other creditors, of the debt swaps agreements they have implemented. All elements necessary to evaluate the operation, its impact on Ethiopia's economy and on the evolution of creditor's exposure will be transmitted to the Secretariat including: its nature and purpose; the parties to the debt swap; the amount, type and value of the debt treated; the price of sale to investors and the expense of Ethiopia.

Payment of non-consolidated amounts before December 31, 2004

Comparability of treatment provision

The Federal Democratic Republic of Ethiopia was declared eligible to the Enhanced HIPC Initiative by the IMF and the IDA in November 2001 and was declared to have reached its Completion Point on April 20, 2004. In this context, the Federal Democratic Republic of Ethiopia commits to seek promptly, from all its external creditors which are not participating in the present Agreed Minute, their appropriate contribution in terms of debt relief to the Enhanced HIPC Initiative, on top of traditional debt relief mechanisms and consistent with the proportional burden sharing based on their relative exposure in net present value of total external debt at Decision Point after the full use of traditional debt relief mechanisms.

The appropriate nature of the debt relief provided will be assessed not only on the basis of the reduction in the net present value of the debt as computed under Appropriate Market Rate, but also on the terms of repayment of the debts not cancelled. For this purpose, all relevant elements will be taken into account, including the level of cash payments received by those creditors as compared to their share in the Federal Democratic Republic of Ethiopia's external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Federal Democratic Republic of Ethiopia and creditor countries not listed in the present Agreed Minute.

Consequently, the Federal Democratic Republic of Ethiopia commits not to accord any category of creditors and in particular creditor countries not participating in the present Agreed Minute, commercial banks, suppliers and bondholders - a treatment more favourable than that accorded to the Participating Creditor Countries.

Cut-off date

December 31, 1989

Organisation of the session

The meeting was chaired by Mrs Odile Renaud-Basso, Co Chairperson of the Paris Club.

The head of the debtor country's delegation was Mr. Sufian Ahmed, Minister of Finance and Economic Development..

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