Dec 14 , 2023
Somalia is granted a 4.5 billion dollar debt relief from the executive boards of the International Monetary Fund (IMF) and the World Bank’s International Development Association (IDA). The Executives indicated that Somalia has made decent progress in meeting the requirements to reach the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point.
Somalia is the 37th country to reach Completion Point under the HIPC Initiative which was launched in 1996 to provide debt relief to the poorest and heavily indebted countries.
Somalia’s external debt has fallen from 64pc of GDP in 2018 to less than six percent of GDP in 2023.
Close to three billion dollars in debt service relief has been provided by bilateral and commercial creditors including the Paris Club and the Arab Coordination Group while other multilateral creditors provided 573.1 million dollars. Consequently, the IMF gave 343.2 million dollars, IDA 448.5 million dollars and 131.0 million dollars was provided by the African Development Fund.
The debt relief is believed to help Somalia strengthen its economy, reduce poverty, and promote job creation. The process has been nearly a decade of cross-governmental efforts with three political administrations.
Somalia’s President, Hassan Sheikh Mohamud lauded the result as a testament to the national commitment and prioritisation of a crucial agenda.
“This is the fruit of laws, systems, policies, and practice reforms,” he said.
Officials affirmed their commitment to sustaining the reform momentum post-HIPC to build resilience, promote inclusive growth, and reduce poverty.
In the words of Somalia’s Minister of Finance, Bihi Iman Egeh, the reforms have raised domestic revenues, strengthened public financial management, improved good governance and central banking operations, and enhanced the capacity of national institutions.
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