Somalia eligible for $5.3 billion debt relief – World Bank and IMF

Executive Boards for International Monetary Fund [IMF] and World Bank on Thursday commended Somalia for commitment towards “economic and institutional reforms”, paving way for debt relief.

The two bodies have agreed that Somalia is eligible for assistance under Enhanced Highly Indebted Poor Countries [HIPC], a move critical towards debt relief, the statement said.

Kristalina Georgieva, IMF’s Managing Director, and Acting Chair termed the move “historic”, adding that it would help Somalia unlock access to needed resources.

The IMF boss said the move helps to “increase growth and reduce poverty is a key priority for the IMF.”

David Malpass, World Bank Group President, said the move is critical towards Somalia resuming financing from international institutions. He said Federal Government of Somalia has worked closely with the World Bank in paving way for radical financial reforms, with the aim of setting required standards.

 President Farmajo’s administration has set the pace for much anticipated $5.3 billion debt relief, a move critical for economic growth in Somalia. .

To complete the journey to the Highly Indebted Poor Countries Decision Point, IMF said, Somalia’s performance under the current IMF Staff-Monitored Program [SMP] will need to be confirmed as satisfactory.

Further, World Bank staff expect to present the operation for clearing the arrears to the International Development Association (IDA) by the end of February 2020.

The joint statement said once Somalia reaches the Completion Point, it would qualify for unconditional debt relief under the HIPC Initiative.

Abdirahman Beileh, Somalia’s Finance Minister, termed the development “historic moment and pledged that Somalia will remain committed to reforms and sustainable development.

The Highly Indebted Poor Countries Initiative is a framework, created by the IMF and World Bank, in which all creditors, including multilateral creditors, provide debt relief to the world’s poorest and most heavily indebted countries.