(Bloomberg) -- The Paris Club of mostly developed country creditors is said to have extended a deadline for Ethiopia to reach a preliminary bailout deal with the International Monetary Fund by three months to the end of June.

That’s according to a person close to the group, who spoke on the condition of anonymity because they didn’t have permission to discuss the matter publicly.

Ethiopian National Bank Governor Mamo Mihretu separately said that “we welcome the extension of the standstill by the Creditors Committee” without directly confirming any details. The Paris Club did not immediately respond to requests for comment.

Ethiopia, which won a debt standstill agreement with its official creditor committee in November last year, had until the end of March to reach a staff level agreement with the IMF. Failing that, the committee had the right to declare the debt service suspension agreement null and void.

Mihretu, responding to a text message, said the country had made considerable progress during a March 19 to April 2 mission by the International Monetary Fund to Addis Ababa. He said he was hopeful for further headway at the Spring Meetings of the IMF in Washington later this month.

‘Substantial Progress’

Mihretu’s remark echoed the IMF following the mission, which said the talks made “substantial progress towards establishing how the IMF could support the authorities’ economic program,” but ended with no deal.

Ethiopia in December became Africa’s latest sovereign defaulter, joining Zambia and Ghana. All three are trying to restructure billions of dollars in external debts using the Group of 20’s Common Framework mechanism, which seeks to coordinate talks between Paris Club members and new big creditors such as China.

Adding a layer of complexity is the requirement for debtor nations to seek comparable debt relief from private creditors ranging from hedge funds that hold their eurobonds to commercial banks. 

Ethiopia in December told bondholders it faced an estimated $11.5 billion financing gap over the next four years, according to a copy of a finance ministry presentation seen by Bloomberg and confirmed by a source close to the matter. The authorities plan to cover the shortfall with $3.5 billion from the IMF, an equal amount from the World Bank, and $4.5 billion through debt relief. The amounts are preliminary and still under discussion.

The Paris Club on Nov. 30 announced the debt suspension, which runs from January 2023 through December 2024. China had already agreed a separate bilateral payment suspension with Ethiopia. In December, the government defaulted on a coupon payment for its sole $1 billion dollar bonds, citing a need to treat creditors equally.

--With assistance from Colleen Goko.

(Updates with details of country’s financing gap in penultimate paragraph.)

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