Ethiopia, whose economy is still largely administered and facing significant debt, has reached an agreement in principle with bilateral creditors for an $8.4 billion restructuring of its public debt, the Ministry of Finance announced on Friday.

Ethiopia has reached an agreement in principle with its creditors to restructure its $8.4 billion debt, the Ministry of Finance announced on Friday.

The East African nation is burdened with around $30 billion in external debt and has been in negotiations since 2021 with its creditors to cancel some of the repayments.

Ethiopia, whose economy was hit hard by the Covid-19 pandemic, the war between Russia and Ukraine, and a devastating civil war in 2020-22, defaulted on some debt payments at the end of 2023.

The new agreement in principle “marks an important step in our efforts to normalize our relationships with our international partners and ensure economic stability for the Ethiopian people,” Finance Minister Ahmed Shide said in a statement posted on Facebook.

The restructuring was negotiated under the G20 “Common Framework”, a mechanism introduced by the world's richest countries in 2020 to help countries in difficulty cancel some of their debts under strict conditions.