Somalia’s Prime Minister, Hamza Barre, has announced a significant milestone for the country, revealing that the International Monetary Fund (IMF) and the World Bank have granted a debt relief package amounting to $4.5 billion.
Barre emphasized the profound impact of this relief, stating, “This is equivalent to relieving every Somali person of a debt of more than $300,” and characterizing it as a “testament that our country and our people are financially viable, attracting foreign investment, and we are no longer debt-ridden.”
Describing the relief as monumental, the Prime Minister highlighted its potential to fuel investment in development programs, revive the economy, and enable Somalia to secure loans from international lending institutions.
Celebrations ensued in the capital, Mogadishu, following the announcement of the debt relief, underscoring the significance of this financial development for the Somali government.
To accelerate progress towards the United Nations’ Sustainable Development Goals, the debt relief initiative is rooted in the Multilateral Debt Relief Initiative, an extension of the HIPC Initiative, initiated in 2005.
In a joint statement titled ‘IMF and World Bank Announce US$4.5 billion in Debt Relief for Somalia,’ the IMF and the World Bank disclosed that their executive boards have approved the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point for Somalia, providing the country with total debt service savings of US$4.5 billion.
The statement further highlighted the substantial reduction in Somalia’s external debt, noting that it has fallen from 64 per cent of GDP in 2018 to less than 6 percent of GDP by the end of 2023.
Launched in 1996, the Heavily Indebted Poor Countries Initiative by the IMF and the World Bank aims to prevent any poor country from facing an unmanageable debt burden, underscoring their commitment to sustainable economic development.
