Ethiopia: China's Reprieve On Interest-Free Loan Only

Photo: World Bank
Debt.

It has come to the attention of Addis Standard that China's pledge to write off Ethiopia's debt is related only to interest-free loan, and not "interest on all loans", as was initially reported by state-affiliated FanaBC.

According to a correction sent to Addis Standard from the office of Prime Minister Abiy, who is currently attending Belt and Road Forum in Beijing, China, the reprieve pledged by President Xi Jinping is on "interest free loans matured till end of 2018'only.

AS could not establish the amount as of yet.

The cancellation of interest-free loan is in line with the promise President Xi made back in September 2018 during which China also agreed to restructure some of its loans, including the one for the $4 billion railway linking Addis Abeba with Djibouti. Accordingly, PM Abiy and President Xi held discussions yesterday during which PM Abiy shared "the commitment of Ethiopia to deepening the comprehensive strategic partnership with China, which is enabling critical moves like restructuring the debt of the Addis Abeba - Djibouti railway," PM Abiy's office said. It is to be remembered that in September 2018 China has extended the maturity period for the Addis Abeba-Djibouti railway loan from ten years to 30 years.

The premier also met with officials of China Railway Construction Corporation (CRCC) on the margins of the Belt and Road Forum. "CRCC's current largest engagement includes connecting Ethiopia and Djibouti through the railway project."

In Addition PM Abiy met with China's Premier Li Keqiang and the two have presided over the signing of five agreements "that reflect the deepening of these relations," PM Abiy's office said. The agreements signed include: a financing agreement for development of a plaza and 12km of the 'Beautifying Sheger' river bank project; provision of grants for technical cooperation; provision of grants to go towards food aid; Belt and Road Initiative five year cooperation plan; and a Memorandum of Understand (MoU) operationalizing cooperation under Forum on China-Africa Cooperation (FOCAC).

A separate meeting with State Grid Corporation of China resulted in the signing of a $1.8 billion investment agreement which covers provision of electric power transmission and distribution lines. "This project will supply power for up to 16 industrial parks; the Addis Abeba to Djibouti 2nd railway line and for different cities in the country," the PM's office said. AS

Editor's Note: In line with the above correction, Addis Standard deleted all social media posts outsourced from external sources with the erroneous information.

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