IMF and World Bank have given Somalia approval for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, resulting in $4.5 billion in savings for the country. This move has reduced Somalia’s external debt from 64% of GDP in 2018 to less than 6% by the end of 2023.
“This debt relief will facilitate access to critical additional financial resources that will help Somalia strengthen its economy, reduce poverty, and promote job creation.” said the World Bank in a statement.
The debt relief totaling $4.5 billion for Somalia has been extended by various entities: the IMF contributed $343.2 million, IDA provided $448.5 million, the African Development Fund (ADF) offered $131.0 million, and other multilateral creditors contributed $573.1 million. Additionally, significant support came from bilateral and commercial creditors, with a substantial sum of $3.0 billion. Bilateral creditors encompass members of the Paris Club, creditors from the Arab Coordination Group, and other official bilateral creditors.
“For Somalia to move forward in the positive economic direction we all needed, we had to reform our laws, systems, policies, and practices. Reaching the HIPC Completion Point is the fruit of these reforms.
Somalia’s President, H.E. Hassan Sheikh Mohamud
As per the World Bank, Somalia consistently advanced in implementing structural reforms, successfully addressing thirteen out of fourteen floating Completion Point triggers. These achievements covered various aspects, such as public financial and expenditure management, domestic revenue mobilization, governance, social sectors, and statistics. Additionally, the IMF Executive Board granted a waiver for the adoption and implementation of a unified import duty tariff schedule at all ports.
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