Follow us

2,675FansLike
227FollowersFollow
6FollowersFollow
FollowersFollow
902FollowersFollow
138SubscribersSubscribe

Somalia debt to be reduced from $5.2 billion to just $557 million, IMF and World Bank announce

Although we are headquartered in Washington D.C. USA, our reporters and editors are working around the globe to cover what you care about. We invite you to donate to our fundraiser to help us keep our quality news free and available for all.

The International Monetary Fund (IMF) and the World Bank’s International Development Association announced on Wednesday that Somalia has taken all the necessary steps to begin receiving debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.

Somalia is the 37th country to reach the milestone, known as the HIPC Decision Point.

“Debt relief will help Somalia make lasting change for its people by allowing its debt to be irrevocably reduced from US$5.2 billion at end-2018 to US$557 million in net present value terms (NPV) once it reaches the HIPC Completion Point in about three years’ time,” the Fund and the Bank said in a joint statement to TODAY NEWS AFRICA in Washington D.C.

[read_more id="2" more="Read full article" less="Read less"]

They said as Somalia continues on its path towards stability and development after 30 years outside the international financial system, the immediate normalization of its relations with the international community will re-open access to critical additional financial resources to strengthen the economy, help improve social conditions, raise millions out of poverty, and generate sustainable employment for Somalis.

“I would like to congratulate the Somali government and people for their intense efforts over the past years leading to this momentous event,” said Kristalina Georgieva, IMF Managing Director. “Successful reform efforts have laid the foundation for inclusive economic growth and for addressing the needs of the country’s most vulnerable people. Work must continue to sustain and expand the implementation of these reforms as Somalia starts a new chapter of its history. I am confident a more resilient and prosperous future lies ahead for the people of Somalia.”

World Bank Group President David Malpass welcomed Somalia’s efforts “to restore stability, engage with creditors, and adopt a poverty reduction strategy.”

“Resumption of regular financing to Somalia is an important landmark, and we look forward to further economic and social progress,” he said.

Somalia has committed to maintaining macroeconomic stability; implementing a poverty reduction strategy; and putting in place a set of reforms focused on fiscal stability, improving governance and debt management, strengthening social conditions, and supporting inclusive growth in order to reach the HIPC Completion Point.

Hassan Ali Khayre, Prime Minister, Federal Government of Somalia said “the Government and People of Somalia are very pleased by the IMF’s and World Bank Group’s decision which allows Somalia to fully re-engage with International Financial Institutions. This decision is an important milestone which presents ample opportunities for Somalia as it relentlessly pursues its ongoing reform processes as well as its recovery and development agenda,”

“The journey leading to this decision required hard work, dedication and partnership. The FGS expresses its appreciation to the IMF, World Bank Group and partners for their unwavering support and to the Somali people for their patience and resilience in this journey.”

The World Bank and IMF said they will continue working together with the authorities in Somalia to provide the technical assistance and policy guidance they need to achieve these goals, including in the context of the new, three-year IMF financial arrangement.

In addition, the World Bank is considering a range of new IDA investments with a focus on immediate relief for communities impacted by flooding, the locust invasion as well as preparing for the fast-moving threat of COVID-19.

The leadership of the World Bank Group and the International Monetary Fund expressed thanks to their member countries of all regions and income levels, in particular Italy, Norway, Qatar, and the United Kingdom, together with the EU, whose interventions catalyzed support and provided the necessary financial resources to help Somalia reach the Decision Point.

Below are details of the Debt Relief Operation

• At the start of the HIPC process, Somalia’s public- and publicly guaranteed external debt was estimated at US$5.2 billion in NPV terms. Application of traditional debt relief mechanisms reduces this debt to US$3.7 billion.

• Additional debt relief under the enhanced HIPC Initiative is estimated at US$2.1 billion in NPV terms. Of this amount, US$843 and US$1,225 million is projected to be provided by official multilateral and bilateral creditors, respectively.

• Paris Club creditors are expected to make a decision on debt relief by the end of March 2020. The largest Paris Club creditors are the United States, Russia, Italy, and France. The IMF Executive Board has approved interim debt relief on debt service falling due to the IMF in the period between the HIPC Decision and Completion Points. At the HIPC Completion Point, Somalia’s current debt due to the IMF will be paid with the proceeds of financial contributions that have been received from over 100 IMF members, including many low-income countries.

• MDRI debt relief from IDA and the African Development Bank would cancel all remaining claims at the Completion Point.

• Together, Somalia’s external debt burden is expected to fall from about US$5.2 billion (110.7 percent of GDP) in NPV terms as of end-2018 to US$557 million (9 percent of GDP) once the Completion Point is reached. IMF and World Bank Arrears Clearance Operations

• Arrears to IDA were cleared on March 5, 2020 through bridge financing provided by the government of Norway, reimbursed with the proceeds of a Development Policy Grant.

• Arrears to the IMF were cleared on March 25 with the assistance of bridge financing from the government of Italy, which the authorities have reimbursed using the frontloaded access under the new IMF financial arrangement. (See details in a separate press release)

• Arrears to the African Development Bank were cleared on March 5, 2020 through bridge financing provided by the government of the United Kingdom and a contribution from the EU. The bridge loan from the UK was reimbursed by the proceeds of a Policy Based Operation Grant. 

[/read_more]

Simon Ateba
Simon Ateba
Based in Washington, District of Columbia, United States of America, Simon leads a brilliant team of reporters, freelance journalists, analysts, researchers and contributors from around the world to run TODAY NEWS AFRICA as editor-in-chief. Simon Ateba's journalistic experience spans over 10 years and covers many beats, including business and investment, information technology, politics, diplomacy, human rights, science reporting and much more. Write him: simonateba@todaynewsafrica.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Trending Now

Follow us

2,675FansLike
227FollowersFollow
6FollowersFollow
1FollowersFollow
902FollowersFollow
138SubscribersSubscribe

U.S. Supreme Court Justice Ruth Bader Ginsburg dead at 87, thrusting apex Court vacancy into spotlight of presidential campaign

U.S. Supreme Court Justice Ruth Bader Ginsburg has died at the age of 87, thrusting the apex court vacancy into spotlight...

Five Africans from Nigeria, Egypt, Senegal, Liberia and Uganda make UN 2020 class of 17 young world leaders

The United Nations on Friday announced the names of the latest class of 17 Young Leaders for the Sustainable Development Goals...

UN calls for bold action for world to recover from COVID-19

Amidst a crisis unlike any other in our lifetimes, with COVID-19 destroying lives and livelihoods across the globe, the 75th session...

USAID awards millions of dollars to Washington State University to combat lethal livestock disease in East Africa known as East Coast Fever

The U.S. Agency for International Development (USAID) has awarded millions of dollars to Washington State University to combat a lethal livestock...

540 bipartisan elected officials from all 50 U.S. states urge President Trump to welcome refugees

At least 540 local and state elected officials from all 50 states and the District of Columbia expressed their strong support...

MOST POPULAR

Nigerian activists sue Senate President and House of Representatives Speaker over ‘failure to publish details of corruption probes’

Nigeria's Socio-Economic Rights and Accountability Project (SERAP) has filed a lawsuit against the Senate President, Dr Ahmad Lawan and Speaker of House...

One of Nigeria’s most influential pastors Enoch Adeboye protests rising insecurity under Buhari as Prophet T.B. Joshua calls for prayers

Enoch Adejare Adeboye, one of Nigeria's most influential pastors, and General Overseer of the Redeemed Christian Church of God with branches...

IMF announces COVID-19 youth fellowship contest

The International Monetary Fund (IMF) on Friday announced its IMF 2020 Annual Meetings Youth Fellowship Contest, which is open to bloggers,...

South African president gives defense minister 48 hours to explain why air force plane was used to fly ANC members to Zimbabwe

South African President Cyril Ramaphosa has given Minister of Defense and Military Veterans Nosiviwe Mapisa-Nqakula 48 hours to explain why a South...

The world should hear the cries of Oromo people in Ethiopia

The Oromo people in Ethiopia are good people and the world should hear their cries for justice, equality, peace, liberty, democracy...

U.S. Supreme Court Justice Ruth Bader Ginsburg dead at 87, thrusting apex Court vacancy into spotlight of presidential campaign

U.S. Supreme Court Justice Ruth Bader Ginsburg has died at the age of 87, thrusting the apex court vacancy into spotlight of the presidential campaign.The Supreme Court said in a statement Ginsburg died from metastatic cancer of the pancreas at her home in Washington surrounded by family."Our nation has lost a justice of historic...

Stay connected

[/read_more]

[read_more id="2" more="Read full article" less="Read less"]

Share
Tweet
WhatsApp
Reddit
Share