IBX-Jakarta. Somalia secured a $4.5 billion debt relief agreement from its international creditors on Wednesday, according to statements from the International Monetary Fund and World Bank. This financial arrangement aims to bolster Somalia’s economic development and facilitate the undertaking of new projects. Part of an initiative known as the Heavily Indebted Poor Countries program overseen by these institutions, this deal is expected to substantially reduce Somalia’s external debt from 64 percent of GDP in 2018 to less than 6 percent by the conclusion of 2023, as outlined in a joint announcement by the IMF and World Bank. Official figures indicate that Somalia’s current national debt exceeds $5 billion.
President Hassan Sheikh Mohamud of Somalia praised the nearly decade-long collaborative efforts across different governmental administrations, acknowledging it as a testament to the nation’s commitment and emphasis on this pivotal agenda. The U.S. Treasury expressed its intention to completely nullify Somalia’s remaining claims and urged other bilateral creditors to follow suit promptly, emphasizing the significance of this agreement in Somalia’s journey toward recovery and meaningful reforms for the welfare of its people, according to Treasury Secretary Janet Yellen.
Ali Yasin Sheikh, Somalia’s central bank deputy governor, welcomed the debt relief initiative, highlighting the country’s eagerness to secure new funding for public projects and attract fresh investments. He stressed that debt forgiveness would alter global perceptions about Somalia’s economic stability, opening doors to international financial markets and global funding sources. However, he cautioned that implementing preventive measures is crucial to prevent Somalia from slipping back into high debt.
Despite ongoing security challenges resulting from years of unrest, Somalia is striving to overcome its status as one of the world’s poorest countries. It seeks political stability amid transitions, such as the leadership change in 2022 that brought in Hassan Sheikh Mohamud, despite the persistent insurgency by al-Shabab, an extremist group controlling significant rural areas. Al-Shabab regularly perpetrates deadly attacks in Mogadishu and other parts of the country, opposing the federal government’s authority.
Source: Somalia secures $4.5 billion debt relief deal with international creditors (msn.com)