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IMF, World Bank Announce $4.5 billion in Debt Relief for Somalia

The International Monetary Fund (IMF) and the World Bank have approved the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point for Somalia, which provides total debt service savings for the country of 4.5 billion US Dollars.

The HIPC Initiative is a two-step milestone-based framework that began with the formal start of the HIPC process known as the Decision Point, culminating in the Completion Point.

Following the Completion Point, the IMF says, Somalia’s external debt has fallen from 64 percent of GDP in 2018 to less than 6 percent of GDP by the end of 2023.

“This debt relief will facilitate access to critical additional financial resources that will help Somalia strengthen its economy, reduce poverty, and promote job creation,” the Fund said in a statement announcing the debt relief today.

Debt service relief has been provided by the IMF ($343.2 million), World Bank’s IDA ($448.5 million), African Development Fund (ADF) ($131.0 million), other multilateral creditors ($573.1 million), as well as by bilateral and commercial creditors ($3.0 billion).

Bilateral creditors include members of the Paris Club, creditors from the Arab Coordination Group, and other official bilateral creditors.

Somalia’s debt relief process has been nearly a decade of cross-governmental efforts spanning three political administrations, according to its President Hassan Sheikh Mohamud.

“This is a testament to our national commitment and prioritization of this crucial and enabling agenda,” President Mohamud said in the statement. “For Somalia to move forward in the positive economic direction we all needed, we had to reform our laws, systems, policies, and practices.”