Ethiopia's foreign direct investment inches up ahead of bond restructuring

ADDIS ABABA, Aug 19 (Reuters) - Ethiopia received $4 billion in foreign direct investment during its fiscal year to July 2025, its Investment Commission said on Tuesday, marking a 2.2% increase from the previous year.

The data is being closely watched by markets since it has a bearing on the way Ethiopia's sole $1 billion international bond XS1151974877=TE will be restructured after a default.

Far-reaching economic reforms backed by the International Monetary Fund, including the floatation of the birr currency, have boosted foreign investor confidence, the Ethiopia Investment Commission said in a statement.

The Commission issued 525 new investment permits during the period under review, it said, and 19 for expansion of existing projects by overseas investors.

The investments target key sectors like manufacturing, agriculture and information and communication technology, the Commission said.

The government has proposed that investors take an 18% writedown during the restructuring of the bond, arguing that Ethiopia faces an insolvency problem.

A group of bondholders has however opposed the plan, saying the country faces only a short-term liquidity issue. They have cited strong export earnings for that assessment.

The IMF has meanwhile warned that Ethiopia's balance of payments faces downward risks, mainly due to potentially lower than expected aid flows and foreign direct investment.

The government said in July it had completed a deal to restructure its debts with bilateral creditors, and it is expected to commence formal talks with bondholders soon.