In order to pay off its debt, Somalia will gain access to a $4.5 billion debt reduction plan with international creditors, the International Monetary Fund (IMF) said in a statement on Wednesday.
“Intergovernmental efforts spanning three political administrations for nearly a decade resulted in Somalia’s debt relief process. According to Somali President Hassan Sheikh Mohamoud, “It is a testament to our national commitment and the priority given to this crucial and promising programme.”
The International Development Association (IDA), a World Bank organisation that provides loans to the world’s poorest nations, and the Executive Boards of the IMF approved this debt relief for Somalia on Wednesday. The Heavily Indebted Poor Countries (HIPC) Initiative was used to carry it out.
The IMF contributed $343.2 million, IDA contributed $448.5 million, and the African Development Fund (ADF) contributed $131 million towards debt service reduction, or interest on these loans. $3 billion was contributed by bilateral creditors and organisations, including members of the Paris Club, while additional multilateral creditors contributed $573.1 million.
As stated by the IMF and the other organisations, it has been “determined that Somalia has made satisfactory progress towards meeting the requirements necessary to reach the HIPC completion point”.
The IMF also noted that Somalia had maintained sound macroeconomic management and had been putting a poverty reduction plan into practice for at least a year. With a population of about 17 million, Somalia is a country in the Horn of Africa. Since the beginning of October, the country has experienced torrential rains brought on by the El Nino weather phenomenon, which have forced at least a million people to flee their homes and killed over 100.
