Somali President Hassan Sheikh Mohamoud hailed the debt relief process as a testament to nearly a decade of cross-administration efforts in the country. He emphasized Somalia’s dedication and prioritization of this significant and promising initiative, according to the statement.
The debt relief for Somalia, approved by the Executive Boards of the IMF and the International Development Association (IDA) – a World Bank entity that assists the world’s poorest nations – occurred under the Heavily Indebted Poor Countries (HIPC) Initiative.
The IMF extended debt service reduction amounting to $343.2 million, the IDA contributed $448.5 million, and the African Development Fund (ADF) offered $131 million. Additionally, other multilateral creditors provided $573.1 million, while bilateral creditors and agencies, including members of the Paris Club, contributed $3 billion.
Confirming Somalia’s satisfactory progress toward fulfilling the necessary requirements for achieving the HIPC completion point, the IMF and associated institutions declared their assessment.
The IMF highlighted Somalia’s implementation of a poverty reduction strategy for over a year and its maintenance of commendable macroeconomic management. Despite challenges faced by the country, such as severe El Nino-induced rains resulting in displacement and casualties, Somalia, with a population of about 17 million, has been grappling with recurring historic droughts that devastated livestock.
Moreover, since 2007, Somalia has confronted an insurgency by the radical Islamist group Shebab, affiliated with Al Qaeda. While the Somali authorities had made significant advances against the group, progress in their offensive has stalled in recent months.