Somalia Qualifies for Debt Relief under HIPC initiative

Somalia has reached a stage to receive debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, the global lender said.

In a statement, the IMF and World Bank Group said Somalia has taken the necessary steps to begin receiving debt relief. This major step will allow Somalia to lower its over five billion external debt to 557 million dollars. 

The decision will immediately normalize Somalia’s relations with the world after 30 years outside the international financial system, the International Monetary Fund and the World Bank’s International Development Association said.

The announcement was made by IMF managing director, Kristalina Georgieva in a video statement.

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The prime minister of Somalia Hassan Ali Khaire said that Somalia reached this milestone after a strenuous three years journey and immense reform. He said Somalia enacted ten new laws to fulfill the requirements for this milestone. 

Somalia’s Paris Club creditors – including the United States, Russia, Italy and France – are expected to make a decision on debt relief for Somalia by the end of March, they said in a joint statement.

The announcement by the IMF and the World Bank will send a powerful signal to Somalia’s Paris Club and non-Paris Club creditors about the country’s future and the intense reform efforts it has undertaken over the past eight years.

Somalia, with a population of 15 million, is the 37th country to reach this “Decision Point” under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.