Somalia is set to receive a significant boost with a $4.5 billion debt reduction plan agreed upon by international creditors, as announced by the International Monetary Fund (IMF) in a statement on Wednesday.
The debt relief process for Somalia is the culmination of intergovernmental efforts spanning three political administrations over nearly a decade.
In a statement, Somali President Hassan Sheikh Mohamoud expressed that this achievement is a testament to the national commitment and priority given to this crucial and promising program.
The approval for Somalia’s debt relief was granted by the Executive Boards of the IMF and the International Development Association (IDA), the World Bank agency that provides loans to the poorest countries.
This initiative falls under the Heavily Indebted Poor Countries (HIPC) Initiative.
The IMF, IDA, and the African Development Fund (ADF) have collectively reduced debt service (or interest on loans) by $343.2 million, $448.5 million, and $131 million, respectively.
Additionally, other multilateral creditors contributed $573.1 million, while bilateral creditors and agencies, including members of the Paris Club, contributed $3 billion.
The IMF and other institutions have affirmed that Somalia has made satisfactory progress towards meeting the requirements necessary to reach the HIPC completion point.
This is a boost for Somalia’s efforts to address its debt burden and pave the way for economic stability and growth.