(Bloomberg) -- Ethiopia plans to restructure an additional $1 billion of debt as the government seeks to free up funds to support its economic recovery.

Restructuring of the debt will provide a grace period of as long as six years and extend the maturity by 10 years, the Finance Ministry said in a report on its website. “$2.5 billion in principal and interest payment has been postponed for five years by commercial creditors under the first external debt restructuring scheme,” according to the report.

The announcement comes after Ethiopia in January requested to rework its debt under the Group of 20 common framework -- an initiative to secure debt relief for poor nations from all creditors, including China and commercial lenders.

The plan to restructure at least $1 billion more doesn’t include Eurobonds, State Minister of Finance Eyob Tekalign said by phone on Wednesday.

G-20 Request

Separately, the International Monetary Fund on Tuesday urged Ethiopia to quickly create a creditor committee to support the nation’s debt plans.

The IMF in February said it backed Ethiopia’s move to rework its debt under the G-20 program as it would strengthen debt sustainability, and boost the nation’s efforts of recovering from the coronavirus pandemic. With sovereign debt, Chinese loans and other official credit, Ethiopia is considered a key test for the G-20 push aimed at averting a slew of defaults in the developing world.

“The IMF strongly encourages the swift formation of the creditor committee for Ethiopia to enable the timely delivery of the debt operation that Ethiopia is requesting” under the G-20 common framework, IMF spokesperson, Gerry Rice, said in an emailed statement. The committee will support Ethiopia’s plan to create fiscal space for development spending and lower the risk that comes with reprofiling debt-service obligations, according to the statement.

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