Ethiopia has reached a debt restructuring deal with Italy, marking a new step in efforts to stabilise its finances and implement reforms following its default on the country’s sole eurobond.
The agreement, signed in Rome on March 18 by Finance Minister Ahmed Shide and Italy’s Economy Minister Giancarlo Giorgetti, is part of the G20 Common Framework, a global initiative aimed at helping nations manage unsustainable debt.
This follows a July 2025 understanding between Ethiopia and its official creditors, which unlocked over $3.5 billion in anticipated debt relief. Italy’s deal represents the second bilateral agreement under the framework, signalling gradual progress after years of protracted negotiations.
Ethiopia first sought debt treatment in 2021 amid rising external debt, foreign exchange shortages, and economic shocks from conflict and the pandemic, which ultimately led to a eurobond default in December 2023 and placed the country among emerging markets facing debt distress.
Despite being one of Africa’s fastest-growing economies, with about 8.1% growth in 2023/2024, the recovery remains uneven. Inflation has remained high at roughly 17.5%, and ongoing dollar shortages continue to disrupt imports and business activity.
The government has rolled out reforms supported by the International Monetary Fund, including currency adjustments and stricter fiscal measures, aimed at restoring economic stability and ensuring debt sustainability.
Italy noted that the agreement aligns with these reforms and also advances its Mattei Plan for Africa, under which Ethiopia is a priority partner for investment and cooperation.
The deal is expected to bolster negotiations with other creditors as Ethiopia works to secure similar terms and complete a full restructuring of its external debt.