In order to sort out the current financial challenges, Ethiopia is looking to renegotiate its obligations through what is called the Group of 20’s ‘Common Framework’, which is what Zambia and Ghana also did.
If they don’t, their existing debt will shoot up in price (long term cost) and they will struggle to get others to trust them enough to give them any more money because they might just never pay it back.
They desperately need to make a plan or new agreement. If you can’t pay what you are meant to you either (1) go find money somewhere else or (2) you ask the people you owe money to, to make some sort of arrangement for you. Often times such an arrangement will cost you more in the long run, of course.
‘Often times such an arrangement will cost you more in the long run, of course’
With regard to all their other massive debts, the International Monetary Fund (IMF) recently offered Ethiopia a temporary debt service suspension deal but Ethiopia must strike a detailed long term deal with the IMF by March 31 or it could nullify the temporary agreement.
It seems that the coming weeks over year end will be critical as Ethiopia navigates its financial challenges and negotiates with international creditors.