SOMALIA celebrates a groundbreaking milestone as the IMF and the World Bank’s International Development Association (IDA) greenlight the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point. This historic decision slashes Somalia’s total debt service burden by a staggering $4.5bn, marking a significant achievement.
President Hassan Sheikh Mohamud expressed profound national pride, highlighting the country’s decade-long dedication and perseverance across multiple administrations. He stated, ‘For Somalia to move forward in the positive economic direction we all needed, we had to reform our laws, systems, policies, and practices. Reaching the HIPC Completion Point is the fruit of these reforms.’
Finance Minister Bihi Iman Egeh emphasised Somalia’s comprehensive reform journey, attributing success to relentless efforts in overhauling legal frameworks, policies, and operational systems. ‘Through our enabling reforms, we have consistently raised domestic revenue, strengthened public financial management, improved good governance, and central banking operations,‘ Egeh affirmed in a statement on Wednesday.
The World Bank Vice President for Eastern and Southern Africa, Victoria Kwakwa, applauded Somalia’s commitment to critical reforms supporting pro-poor growth and poverty reduction. She stated, ‘Somalia has implemented critical reforms in support of better public financial management and debt management. Deepening structural reforms after the Completion Point will be critical to boost private sector growth and create fiscal space.’
In a statement, both the IMF and the World Bank recognised Somalia’s resilience in rebuilding its economy and institutions despite adversities like the global Covid-19 pandemic, severe droughts, and security risks. Jihad Azour, the IMF’s Director for the Middle East and Central Asia, remarked, ‘The Completion Point restores debt sustainability and offers access to new external financing to support inclusive growth and poverty reduction.’
Moving forward, sustained reform momentum remains pivotal for Somalia to harness the full benefits of debt relief and achieve inclusive growth and poverty reduction. The World Bank and IMF reiterated their commitment to providing technical assistance and policy guidance to support Somalia’s continued progress.
This debt relief of $4.5bn encompasses various initiatives, including the Enhanced HIPC Initiative and commitments from Paris Club creditors. Somalia’s attainment of the HIPC Completion Point signifies a remarkable stride, providing a framework for sustainable debt and fostering economic growth in impoverished nations.
