Ethiopia to issue $7.5 bln local bonds to pay state firms’ debts, parliament document shows

ADDIS ABABA, Nov 5 (Reuters) – Ethiopia plans to issue 10-year local Treasury bonds worth 900 billion birr ($7.50 billion), whose proceeds will be used to pay off debts state-owned firms owe the Commercial Bank of Ethiopia, also state-owned, according to a document approved by parliament on Tuesday.

State Finance Minister Eyob Tekalign told parliament before the approval that the loan repayments would prevent a financial crisis, given that the bank is Ethiopia’s largest.

“The banking sector is now open and this will help the bank to be a strong competitive one,” he said.

Neither Eyob nor the document said when the bonds will be sold.

The government is carrying out significant reforms at the Commercial Bank of Ethiopia to reorient it to a commercial model, the IMF said in a report published on Monday.

The document said 846 billion birr will be used to pay the loans owed to Commercial Bank of Ethiopia, while the remainder will be used to increase the bank’s capital, which stood at 63 billion birr as of July 2023.

The document said that for instance, Ethiopia Railway Corporation, Ethiopia Electric Power, Ethiopia Sugar Corporation, Ethiopia Electric Utility, Ethio Engineering Group, owed Commercial Bank of Ethiopia a total of 398.69 billion birr.

The East African nation secured a $3.4 billion, four-year financing program from the International Monetary Fund in July after carrying out reforms including floating its birr currency . It is also in the midst of a fresh push to put its debt restructuring back on track. ($1 = 120.0122 birr) (Reporting by Dawit Endeshaw; Additional reporting by Duncan Miriri in Nairobi; Writing by George Obulutsa; Editing by Bernadette Baum)

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