Ethiopia is actively negotiating with China to convert a portion of its $5.38 billion debt into yuan-denominated loans. This strategic move, following a similar deal by Kenya, aims to secure significant interest cost savings for the East African nation. The initiative is part of a broader trend among developing nations seeking to reduce their reliance on the US dollar for trade and financing. For China, these agreements are a key component of its long-term strategy to increase the global use of its currency. The International Monetary Fund has viewed such swaps positively, noting they can provide “nontrivial savings” for debtor nations. While the discussions are in early stages, Ethiopia’s central bank governor expressed strong enthusiasm for the potential financial benefits as the country continues its broader efforts to restructure approximately $15 billion in external debt.
Bloomberg
