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Ethiopia’s ad hoc bondholder committee has criticised the IMF over the fund’s projections for Ethiopia’s exports and other economic forecasts. Bondholders have also told Ethiopia that they will reserve their rights over legal action.
Reacting to these statements, Tim Jones from Debt Justice said:
“Bondholders using the threat of legal action to push debtors into worse deals shows exactly why changes are needed to legally suspend payments during debt restructuring negotiations. Ethiopia’s bonds are governed by English law. The UK should pass legislation to prevent litigation during sovereign debt negotiations, just as happens in corporate debt restructurings.”
“Bondholders rejected an extremely generous deal. It allowed them to still make a profit and required bilateral creditors to be repaid significantly less for debt sustainability targets to be met. Creditor governments need to do far more to make private lenders participate in debt relief, including passing laws in the UK and New York so that hedge funds, banks and asset managers cannot hold out from fair levels of debt relief.”
“Bondholders are right to criticise the IMF’s export forecasts for Ethiopia, but it should be because they are extremely optimistic. The IMF predicts Ethiopia’s exports will grow 60% more than the historic average. Basing debt restructurings on over-optimistic forecasts risks repeating restructurings and defaults.”
Notes
Debt Justice (formerly Jubilee Debt Campaign) is a UK charity working to end poverty caused by unjust debt through education, research and campaigning: https://debtjustice.org.uk/
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