Economy
Ethiopia Authorizes Sovereign Guarantees for Strategic Investors
The Reporter · 6 hours ago · Read the Full Story on The Reporter
AI SUMMARY
Ethiopia has established a new legal framework allowing the Ministry of Finance to issue binding sovereign guarantees and compensation commitments to strategic investors.
- The Ministry of Finance is authorized to issue binding compensation commitments and negotiate sovereign guarantees for strategic projects under Council of Ministers Regulation No. 590/2026.
- Qualifying investments must be designated as strategic by the Council of Ministers or the Ethiopian Investment Board based on national priorities, technology transfer, or regional connectivity.
- Compensation commitments can be triggered by government expropriation, nationalization, regulatory deprivation, or state-owned enterprise off-take agreement breaches.
- Potential compensation may cover asset fair market value, termination fees, liquidated damages, and direct operational costs.
- Regulations mandate strict liability caps, mandatory risk assessments, financial thresholds, and a dedicated non-lapsing contingency fund.
- The Ministry of Finance must submit annual disclosures on potential liabilities and payments to the Council of Ministers and the House of Peoples' Representatives.
- Investors must exhaust contractual remedies before claiming payouts, and commitments can be revoked for fraud, gross negligence, or project abandonment.
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