IMF and World Bank Grant $4.5 Billion Debt Relief to Somalia under HIPC Initiative

The International Monetary Fund (IMF) and the World Bank’s International Development Association (IDA) jointly announced the approval of a substantial debt relief package totaling $4.5 billion for Somalia under the Heavily Indebted Poor Countries Initiative (HIPC).

In a collaborative effort, the IMF, the African Development Fund, and various other multilateral, bilateral, and commercial creditors have provided debt service relief, as highlighted in a joint statement issued by the IMF and the World Bank.
IMF Managing Director Kristalina Georgieva commended Somalia’s steadfast commitment to economic reforms, stating, “This is a testament to Somalia’s unwavering commitment to economic reforms. The IMF will continue to build on our strong partnership with Somalia.”
President Hassan Sheikh Mohamud of Somalia expressed his gratitude for the debt relief, acknowledging the comprehensive governmental efforts spanning nearly a decade. He remarked, “Somalia’s debt relief process has been nearly a decade of cross-governmental efforts spanning three political administrations. This is a testament to our national commitment and prioritization of this crucial and enabling agenda.”
The Heavily Indebted Poor Countries Initiative was established to provide a framework for all creditors, including multilateral creditors, to offer debt relief to the world’s poorest and most heavily indebted countries.
The goal is to ensure debt sustainability, reduce constraints on economic growth, and alleviate poverty by mitigating unsustainable debt service burdens.
Somalia’s achievement of reaching Completion Point under the HIPC Initiative marks a significant milestone, making it the 37th country to do so.
The debt relief has resulted in a remarkable reduction of Somalia’s external debt, plummeting from 64% of GDP in 2018 to less than 6% of GDP by the end of 2023.
The debt relief is anticipated to provide Somalia with a crucial economic boost, enabling the nation to focus on sustainable development and poverty reduction.