The United Nations official in Somalia congratulated the Horn of Africa nation for achieving the benchmark set by the World Bank and the International Monetary Fund (IMF), confirming its eligibility for debt relief
James Swan, head of the United Nations Assistance Mission for Somalia (UNSOM), said that by reaching the so-called “decision point” for debt relief under the Highly Indebted Poor Countries’ Initiative (HIPC), Somalia has passed an historic milestone on its path to peace and prosperity.
“Achievement of the HIPC decision point is a major step forward for Somalia’s economic progress, allowing the country to advance towards its long-term objective of inclusive economic growth and poverty reduction,” he commented.
Somalia is carrying US$5.2bn of debt as it prepares for one-person, one-vote elections later this year against the backdrop of extreme humanitarian challenges.
Around 5.2mn are in need of assistance, alongside ongoing attacks by the Al-Shabaab terrorist group and the worst locust outbreak in 25 years.
Global debt relief call: World Bank, IMF
World Bank Group (WBG) and the IMF have called for all official bilateral creditors to suspend debt payments from the world’s 76 poorest countries and enable them to redirect funds towards confronting the economic fallout from the COVID-19 pandemic.
In a joint statement, the two Washington-based institutions asked leaders of the G-20 leading economies to task them at their spring meetings from 16-17 April with assessing the impact and financing needs of each of the countries, which are part of the International Development Association (IDA).
Additionally, reaching “decision point” fully normalises its relations with international financial institutions. It will qualify for certain types of grant financing to meet its public finance and development needs and to access private-sector financing instruments.
The second and final step after decision point, known as the completion point, would open the way for full and irrevocable reduction in debt under the HIPC Initiative.
In a press release, the IMF said that the debt relief for Somalia – the 37th country to reach decision point – would help it make last change for its 15mn people by allowing its debt to be irrevocably reduced from US$5.2bn at the end of 2018 to US$557mn once it reaches completion point in about three years’ time.
