Somalia will embark on a journey to reduce poverty and establish its infrastructure if global lenders write off its debt. The country plans to build major regional ports and create a transport corridor if the World Bank and IMF erase its $5 billion debt.
Currently, the IMF is analyzing grant estimates needed from members to address Somalia’s debt arrears ahead of its November board meeting.
After it obtains the debt relief, Somalia will start spending on education and healthcare to reduce poverty. Moreover, the country will be able to unlock concessional lending to secure enough money to rebuild itself.
Somalia has about $ 4.7 billion in debt. Moreover, the debt amounts to almost 100% of its GDP, which the IMF deems unsustainable. According to the country’s Finance Minister, the country is making good progress on negotiations on the write-off. Minister Abdirahman Duale Beileh notes that the country has hit vital benchmarks in working towards debt forgiveness.
“They were very skeptical when our government started, but now they are saying Somalia has travelled enough,” Said Beileh. “Things are looking up … Everybody was positive,” he added at an IMF annual Meeting with U.S and British officials.
Moreover, the IMF is already showing support to the initiative, pushing for Somalia’s debt relief soon. IMF MD Kristalina Georgieva said she supports Somalia’s effort to achieve debt relief through the Highly Indebted Poor Country Program (HIPC).
Somalia is also negotiating for a $300 million grant annually for every year after it obtains the relief.
Strong International Support for Somalia
The EU, Britain, and Qatar have offered to cover around $ 150 million out of the $330 million Somalia owes IMF. Additionally, U.S Treasury is in talks with Congress on steps necessary to erase its bilateral debt. According to Minister Beileh, Somalia is in bad shape and could, therefore, use all the international support available.
Locally, Somalia is working with neighbours like Eritrea, Kenya, Ethiopia, and Djibouti on a five-year plan to establish a $ 15 billion transport and ports project.