Ethiopia Negotiates Converting Dollar Debt to Yuan to Reduce Costs
The move aims to ease exchange rate pressure, reduce dependence on the dollar and strengthen economic ties with China.
247 - Ethiopia has begun negotiations with China to convert part of its external debt — estimated at US$5,38 billion — into the yuan, the Chinese currency. This move is part of the Ethiopian government's strategy to reduce currency pressure on the country and strengthen financial and trade ties with Beijing, according to reports. Bloomberg this Monday (20).
The governor of the National Bank of Ethiopia, Eyob Tekalign, confirmed that Ethiopian officials met in Beijing last month with representatives from the Export-Import Bank of China (Exim Bank) and the People's Bank of China (PBoC) to discuss debt restructuring, bilateral payment mechanisms, and trade facilitation.
“China is a very important partner for us at the moment. It makes sense to arrange a currency swap. We have already officially requested it and are working on it,” Eyob told [the publication]. Bloomberg, following the annual meetings of the International Monetary Fund (IMF) in Washington.
The move follows a growing trend among African countries seeking to reduce their dependence on the dollar and diversify their financial relationships.
In early October, Kenya also announced the conversion of three Chinese-funded railway loans from dollars to yuan — a decision that, according to the Kenyan Ministry of Finance, will reduce annual interest costs by approximately US$215 million.
With information from Bloomberg and RT Brazil.
