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Thursday December 7, 2023
Mogadishu (HOL) – The International Monetary Fund (IMF) is set to convene its executive board on December 13 to discuss a substantial debt relief proposal for Somalia, as announced by IMF spokesperson Julie Kozack at a press conference on Thursday. The meeting is a critical juncture in Somalia’s prolonged effort to manage its international debt under the Heavily Indebted Poor Countries (HIPC) initiative.
The World Bank’s executive board is also set to review the issue on the previous day.
IMF and World Bank officials are expected to announce that Somalia has reached the Completion Point under the HIPC. According to Kozack, the “upcoming milestone” signifies a crucial step for Somalia, potentially heralding a new chapter in its economic narrative. When Somalia reaches the Completion Point, its foreign debt will fall to $600 million from $5.2 billion.
Last month, Somali and the IMF agreed to a 36-month arrangement of about $100 million under the Extended Credit Facility (ECF).
Launched in 1996 by the IMF and World Bank, the HIPC initiative is designed to aid poorer countries out of crippling debt. It includes a structured process, beginning with a “decision point” where a country’s eligibility for debt relief is determined. After reaching this stage, eligible countries can receive interim debt relief.
Somalia reached the decision point in March 2020, reducing its debt stock from $5.2 billion to $3.7 billion.
To date, out of 39 countries eligible or potentially eligible for HIPC assistance, 36 have reached their completion point and are receiving complete debt relief from the IMF and other creditors.
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