Ethiopia has secured its first bilateral debt restructuring agreement under the G20 Common Framework, striking a deal with France that unlocks fresh financing and marks a key milestone in the country’s long-running efforts to resolve its sovereign debt crisis.
Under the agreement, France will provide €81.5 million or about $96.8 million in new financing to support Ethiopia’s economic reform programme, following the conclusion of bilateral debt talks between Addis Ababa and Paris, Ethiopian officials said.
The deal makes France the first member of the Official Creditor Committee (OCC) to finalise a bilateral restructuring agreement with Ethiopia under the G20 Common Framework, a process the Horn of Africa nation entered in early 2021 as debt pressures mounted.
The bilateral deal follows the signing of a memorandum of understanding in July 2025 between Ethiopia and the OCC, which formalised debt relief terms agreed in March and paved the way for more than $3.5 billion in debt treatment from official creditors.
Ethiopia’s sovereign debt reached unsustainable levels in 2023 as breaches of external debt-to-export thresholds driven by weak foreign exchange earnings and elevated external obligations persisted.
French commitments surge
Ethiopia’s Ministry of Finance said the new $96.6 billion funding adds to the $118.8 million (€100 million) already disbursed by France during the first phase of its Home Grown Reform Agenda initiative, reinforcing Paris’ role as a key bilateral development partner.
According to the ministry, $95 million (€80 million) has been set aside to execute the second stage of the programme while the remaining funds will be used to provide technical assistance.
The two countries have agreed to explore potential French participation in the construction of Ethiopia’s planned new international airport, a strategic project aimed at strengthening trade links, logistics capacity and regional connectivity.
Total investment commitments under the Ethiopia–France partnership now exceed $717 million (€600 million), including more than $356 million (€300 million) earmarked for the energy sector to expand and modernise electricity infrastructure.
Reform momentum draws multilateral support
The French agreement adds to growing financial backing from multilateral lenders as Ethiopia pushes ahead with reforms under a programme backed by the International Monetary Fund (IMF)
As of January 2026, the Washington-based lender has disbursed $2.2 billion to Ethiopia, helping to ease balance-of-payments pressures and support development spending.
Mid-last year, the country also secured a separate $1 billion financing package that authorities said helped lift foreign exchange reserves and stabilise the local currency.
Rising reserves have enabled the National Bank of Ethiopia to step up dollar interventions this year. Banks received $680 million in foreign exchange allocations by the end of January — equivalent to 82% of the total amount disbursed throughout 2025 — highlighting a sharp acceleration in liquidity support.
Officials say improved FXavailability is beginning to ease pressures across the economy, bolstered by moderating inflation.
Debt progress
Beyond official creditors, Ethiopia is also making progress in negotiations with private bondholders after a prolonged stalemate.
Last month, Addis Ababa revived talks with Eurobond holders, offering a 15% haircut on the $1 billion bond it defaulted on in December 2023. The renewed proposal signals a willingness on both sides to compromise after months of deadlock.
Any deal with bondholders will still require clearance from the IMF and the OCC to ensure consistency with Ethiopia’s broader restructuring framework and commitments made to bilateral lenders.
Analysts say resolving Ethiopia’s sovereign debt crisis is critical to restoring investor confidence, rebuilding policy credibility and unlocking sustained foreign capital inflows. While the agreement with France does not resolve the restructuring process on its own, it is widely seen as an important signal that negotiations under the G20 framework are finally moving from principle to execution.
With one bilateral deal now secured, attention is turning to whether Ethiopia can maintain momentum with other official creditors — and translate progress on debt into durable economic recovery.
NB: €1 = $1.8 as of February 12, 2026
