World Bank and International Monetary Fund officials announced on Wednesday that Somalia will receive a $4.5 billion debt relief deal from its international creditors, which will facilitate economic growth and new projects.
This agreement is part of a debt forgiveness program overseen by both organizations, known as the Heavily Indebted Poor Countries initiative.
The IMF and World Bank report in a joint press release that as a result of Somalia’s participation in the program, its external debt will fall from 64 percent of GDP in 2018 to less than 6 percent in 2023.
Somalia’s national debt currently exceeds $5 billion, according to official figures.
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,†said Somalia’s President, H.E. Hassan Sheikh Mohamud in a statement.
The US Treasury stated that it wants to discharge all remaining Somalia debts and “urges Somalia’s other bilateral creditors to be equally generous and to move expeditiously.”
The agreement is “a significant milestone in Somalia’s path to
continued recovery and meaningful reform to promote greater stability and economic opportunities for the Somali people,” according to US Treasury Secretary Janet Yellen.
The debt relief  process, which has lasted nearly a decade, has involved three administrations and symbolizes a softening of relations with an international community that has regarded Somalia as a serious trouble spot for the past 30 years.
The UN Security Council eased a 32 year embargo on arms sales to the Mogadishu administration earlier this month.
The IMF and World Bank began the HIPC project in 1996 to
reduce the debt of impoverished, highly indebted countries, and by the early 2000s, most of the 39 eligible countries had
obtained considerable debt write-offs.
Following the Somalia agreement, Eritrea and Sudan are the
only qualified countries that have yet to finish the process.
