Somalia cleared for debt relief by global lenders
The International Monetary Fund (IMF) has said the Somali government has taken the necessary steps to be eligible for billions of US dollars in debt relief.
The news comes as the global economy strains under the weight of the coronavirus pandemic, as countries prevent people from going to work to contain its spread.
It is thought this development will see Somalia’s debt, currently standing at US$5.2bn, shrink to a tenth of the size over the next three years.
The World Bank’s Somalia representative, Hugh Riddell, told reporters this was the first step of a much broader process to restructure and relieve Somali debt.
Mr Riddell said, “The structure is that the country delivers reforms, it negotiates debt relief conditions with its creditors and once those conditions have been delivered, debt relief is then provided”.
Somalia has not been able to make any repayments since the country was plunged into civil war 30 years ago, tarnishing its credit rating and preventing it from accessing loans.
Debt cancellation will allow the government to acquire desperately needed funds to provide security and health provisions across the country.
Somalia’s Prime Minister, Hassan Ali Khaire, likened the news to the country’s “second liberation, after the first which was the independence of the country, to where we have reached”.
He further added “The timing is also at a time [when] we are going through a difficult challenge… the resources we will have access to through the financial institutions and the development partners will give our country an opportunity to provide services to our people and more importantly to combat the coronavirus that is terrorising our global order.
“In a country like ours that is having challenges in security and terrorism, we’ve put in place strategies that mean you defeat terrorism through economic growth, through empowering youth and women, through creating jobs and allocation of resources in a fair and transparent manner”.
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