In a significant gesture of support, Russia has waived $684 million in debt owed by the Somali government, a move that will bring some relief to the country’s debt burden.
The agreement was signed on Wednesday in St. Petersburg between Finance Bihi Iman Egeh and Russia’s Deputy Minister of Finance, Timur Igorevich Maksimov, in the presence of Deputy Prime Minister Salah Ahmed Jama.
The Russian deal comes as the Russia-Africa Summit opens in St. Petersburg, highlighting the growing interest of Russian businesses in Africa. The debt waiver is expected to provide a boost to Somalia’s economy, which has been struggling to recover from decades of conflict and instability.
This move by Russia follows similar debt forgiveness initiatives by other countries and international organizations. Norway announced debt forgiveness of $1.8 million in January 2020, while the African Development Bank cleared $122.55 million in arrears following contributions by the United Kingdom and the European Union in March 2020. In April 2020, the Paris Club creditors agreed to immediately cancel $1.4 billion owed by Somalia, which amounted to 67% of the debts owed to Paris Club creditors by Somalia.
The United States also pledged to cancel $1 billion in debt by the end of 2024, when Somalia is expected to reach the Completion Point under the Heavily Indebted Poor Countries (HIPC) initiative. The HIPC initiative is a joint initiative of the International Monetary Fund (IMF) and the World Bank that aims to reduce the debt burden of eligible countries to sustainable levels.
The debt burden has been a major obstacle to Somalia’s economic growth, with debt servicing costs consuming a significant portion of the country’s budget. The debt forgiveness initiatives are expected to help Somalia redirect resources towards development programs and poverty reduction.
The debt waiver by Russia is a significant step towards ending Somalia’s debt burden and restoring its economic stability.
The move is also expected to strengthen the ties between Russia and Somalia, and contribute to the growing cooperation between Russia and African countries.
