The Federal Government of Somalia on Thursday cleared arrears to the International Development Association (IDA), completing the process of normalizing financial relationship with the World Bank Group, re-establishing access to new resources from IDA, and paving the way for debt relief under the Heavily Indebted Poor Country (HIPC) and Multilateral Debt Relief Initiative (MDRI).
“I congratulate the Federal Government on reaching this critical milestone that will allow Somalia to access the strongest possible support from the World Bank Group to improve peoples’ lives,” said Axel van Trotsenburg, World Bank Managing Director of Operations.
“This lays the foundations for long term economic and social recovery. I would also like to thank the Government of Norway for its generosity in facilitating the arrears clearance process.”
The World Bank said the payment of the arrears was made possible through a $365.9 million bridge loan from the Norwegian government. It was part of a comprehensive plan for arrears clearance that also includes the International Monetary Fund (IMF) and the African Development Bank.
“I am pleased that Norway is contributing in a smart and constructive way to Somalia’s efforts to reengage with the international community, clear arrears and restore access to concessional funding from IDA. I am also pleased that this important step paves the way for Somalia to receive deep relief on its remaining debt,” said Ine Eriksen Søreide, Minister of Foreign Affairs of Norway.
Abdirahman D. Beileh, Minister of Finance of the Federal Republic of Somalia said the clearance of IDA’s arrears is an opportunity to lock in Somalia’s turnaround.
“As we enter this new course, we look forward to strengthening our collaboration with the World Bank Group and building on the pillars we have laid so far to boost the economy and bring prosperity to our people,” he said. “We are also grateful to the support from Norway which enabled us to clear arrears with IDA.”
In a meeting of the Bank’s Board last week, Executive Directors expressed support for the government’s strong record of fiscal, political, social and economic reforms in recent years which enabled Somalia to reach this major milestone.
They hope that in addition to accessing new IDA resources, Somalia would also work with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) to support the development of its private sector.