The World Bank Board of Directors on Thursday moved toward normalizing financial ties with Somalia after thirty years.
The World Bank said the renewed relations will open up opportunities for Somalia to access concessional financing from the World Bank’s International Development Association (IDA) and to work closely with all arms of the World Bank Group to attract investment that will support the country’s stability and development.
The normalization of relations with the World Bank Group also paves the way for Somalia to receive debt relief under the Heavily Indebted Poor Country (HIPC) and Multilateral Debt Relief Initiative (MDRI) programs to promote growth and recovery over the coming years. Learn more here.
“Today’s decision paves the way for full resumption of operations so the World Bank Group can provide the strongest possible support to Somalia’s efforts toward economic and social recovery,” said Axel van Trotsenburg, World Bank Managing Director of Operations.
“This milestone is the result of several years of close cooperation with the Federal Government, and we now look forward to taking our relationship to the next level with deeper and broader financial and technical support from across the Bank Group.”
The World Bank said the Board’s decision to re-engage with Somalia was based on the government’s strong record of fiscal, political, social and economic reforms in recent years.
It said Somalia’s fiscal management agenda now covers revenue mobilization, budgeting, procurement, auditing, and cash management, as well as accountability over Public Financial Management, adding that the country has also focused strong attention to building core monetary and financial sector governance institutions.
Somalia has also established the basic legal foundations for a market economy, and introduced reforms in strategic sectors including telecommunications, banking, and energy.
The Bank added that economic policy reforms, such as the recently enacted Public Financial Management Law and the Company Law, have improved public financial management and revenue generation.
“Somalia has made important reforms and has demonstrated strong commitment to staying the course,” said Hafez Ghanem, Vice President for Africa, the World Bank.
“These reforms lay the foundation for sustained poverty reduction and better lives for the Somali people, and open the door to private sector investment that can create jobs and drive the economy forward.”
In addition, the World Bank said Somalia’s reforms continue to strengthen the government’s capability to provide critically needed services in health and education to the Somali people, and build a framework for competitive private sector that can create jobs particularly for Somalia’s youth.
It said the federal government has facilitated consultations on a new National Development Plan, outlining the country’s priorities so that investments can be made in the most critical areas.
“Today marks an important step towards full re-engagement of the World Bank Group in Somalia,” said H.E.M. Abdirahman D. Beileh, Minister of Finance of the Federal Republic of Somalia. “This is a recognition of the ambitious reforms to which this government remains committed, to bring transparency and accountability into Somali institutions and to revive the economy. We are grateful to the Bank for the support they have already provided to help the country reach this point and we look forward to planning a new phase of investments to deliver the poverty reduction goals of the National Development Plan.”