Somalia successfully negotiated the elimination of 99% of its debt to members of the Paris Club, marking a significant achievement in the nation’s journey to reintegrate into the global financial framework after years of conflict.
Nations like the United States, Japan, and Russia forgave over $2 billion of Somalia’s debt, as confirmed by the Paris Club, a body within the French finance ministry coordinating creditor nations.
This move followed Somalia’s completion of a debt forgiveness initiative overseen by the International Monetary Fund (IMF) and World Bank, making the country eligible for relief of more than $4.5 billion from all creditors. Attaining the “Completion Point” of the Heavily Indebted Poor Countries Initiative (HIPC) signifies Somalia’s reentry into the international financial sphere after three decades of isolation due to instability and civil strife.
The Paris Club expressed appreciation for Somalia’s commitment to executing a comprehensive poverty reduction strategy and robust economic reform agenda to lay the groundwork for sustainable and inclusive economic growth.
As a result of these efforts, Somalia’s $5.3 billion external debt is projected to decrease to less than 6% of its gross domestic product by the conclusion of 2023, a notable improvement from the 64% recorded at the end of 2018, according to assessments by the IMF and World Bank.