Ethiopia Discusses Yuan Loan Conversion to Ease $5.38B China Debt

Ethiopia is in early-stage discussions with China to convert part of its $5.38 billion debt into yuan-denominated loans, a move aimed at reducing financing costs and strengthening bilateral trade. This follows Kenya's recent similar decision to repay Chinese loans in yuan to save on interest payments and support China's efforts to internationalize the yuan. Discussions were initiated by Ethiopia's National Bank Governor, Eyob Tekalign, during a visit to Beijing and involved the Export-Import Bank of China and the People's Bank of China. Ethiopia defaulted on its external obligations in 2023 and is negotiating the restructuring of approximately $15 billion in debt with official creditors, including China and France. IMF Africa Director Abebe Selassie noted that currency swaps like this could provide significant fiscal relief over the loan amortization period. Ethiopia plans to finalize agreements with official creditors by the end of 2025 and complete talks with commercial creditors by March 2026.