Somalia eligible for debt relief | Voice of America
WASHINGTON – Somalia is eligible for debt relief following the authorities’ economic and institutional reforms, the Boards of Directors of the International Monetary Fund (IMF) and the World Bank announced Thursday.
Somalia’s debt to external creditors is estimated at over $ 5 billion. Somalia owes the biggest debt, $ 1 billion, to the United States.
In a statement released after the board meetings on February 12 and 13, respectively, to review Somalia’s eligibility, the two financial powers approved Somalia’s eligibility for debt relief in the under the Heavily Indebted Poor Countries (HIPC) Initiative.
The IMF and the World Bank are considering #Somalia eligible for debt relief at initial assessment. This is an important step towards the cancellation of the bulk of Somalia’s $ 5.3 billion debt. https://t.co/BU6M4zya0G pic.twitter.com/I10cuTuH15
– IMF (@IMFNews) February 13, 2020
Countries that become eligible for this initiative must engage in economic and financial reforms as well as poverty reduction. For several years now, Somalia has been the subject of IMF staff-monitored programs that have helped Somalia raise revenue and monitor government financial records. The surveillance encouraged the two largest international financial institutions to make a decision, Somali officials said.
In the statement released Thursday, IMF Managing Director Kristalina Georgieva said the move “marks a historic moment.”
World Bank President David Malpass said: “Today was an important step towards resuming funding for Somalia from international financial institutions, including IDA. [International Development Association], our fund for the poorest countries.
Malpass said ongoing programs monitored by IMF staff should be “satisfactory” for Somalia to complete the journey.
He said the World Bank plans to submit the arrears clearance operation to IDA by the end of this month.
The boards of directors of the #IMF & @World Bank confirmed today #Somaliathe eligibility of the debt relief under the enhanced HIPC Initiative. Extremely happy to have taken this historic step in record time! 1/2https://t.co/sJcSifAclN
– SomaliPM (@SomaliPM) February 13, 2020
Prime Minister Hassan Ali Khaire welcomed the statement by the IMF and the World Bank.
“Extremely happy to have reached this historic milestone in record time,” Khaire wrote via Twitter. “I am grateful to the Somali people for their persistence as we put in place difficult reforms. Our partners, as well as for their unwavering support in making this happen with us. ”
Professor Hussein Warsame of the University of Calgary, Canada, says the IMF and World Bank move paves the way for Somalia to get grants and loans to invest in education, health, roads and ports.
“As the Horn of Africa integrates and we are able to establish a trade partnership with Ethiopia, it is important that we take advantage and build our ports and road networks to Ethiopia” , he told VOA Somali.
By connecting roads, ports, education and health services, it will reduce poverty, it will be the big benefit, Warsame said.