Several countries, including members of the Paris Club such as the US, Japan, and Russia, have agreed to cancel more than $2 billion of debt owed by Somalia. This debt forgiveness initiative, overseen by the International Monetary Fund (IMF) and World Bank, aims to alleviate Somalia’s financial burden and pave the way for investment in crucial sectors such as health, education, and infrastructure.
Somalia’s commitment to prioritize poverty reduction aligns with the conditions set forth by the IMF and World Bank as part of the Enhanced Heavily Indebted Poor Countries (HIPC) initiative. Finance Minister Bihi Egeh emphasized that achieving full debt relief will significantly transform Somalia’s future and enable the government to allocate resources towards essential public services.
The conclusion of the HIPC initiative has made Somalia eligible for $4.5 billion worth of debt forgiveness, a crucial step towards reducing the country’s external debt from 64% of its GDP in 2018 to just 6%. This landmark achievement comes after Somalia’s prolonged exclusion from the global financial system due to decades of civil war and militant threats, signaling a new chapter of financial stability and international cooperation for the country.
Source: BBC NEWS