Norway helps Somalia to clear $365.9 million owed to World Bank Group

MOGADISHU, Somalia - The federal government of Somalia has cleared a major debt with the support of the Norwegian government, World Bank said, Thursday, paving way for comprehensive debt relief for Mogadishu.

Somalia is battling to get node from international partners for debt relief amounting to $5.3 billion, a move that could put back its diminishing economy on the right path.

Norwegian government contributed $365.9 million towards the comprehensive scheme, which saw the Horn of Africa nation clearing the International Development Association [IDA], a subsidiary of the World Bank.

With this clearance, Somalia has fully re-established its access to new resources from IDA and paved the way to receive debt relief under the Heavily Indebted Poor Country [HIPC] and Multilateral Debt Relief Initiative [MDRI] to promote growth and recovery, World Bank said.

Axel van Trotsenburg, World Bank Managing Director of Operations, welcomes the significant milestone for Somalia, adding that it will help Somalia to "access the strongest possible support" to improve people's lives.

He added: "This lays the foundations for long term economic and social recovery. I would also like to thank the Government of Norway for its generosity in facilitating the arrears clearance process.”

This effort is part of a comprehensive plan for arrears clearance that also includes the International Monetary Fund [IMF[ and the African Development Bank.

Already, the African Development Bank has also cleared Somalia, paving way for debt relief plans. IMF also solicited $334 million for Somalia's debt clearance, after "impressive financial reforms" in Mogadishu.

I am also pleased that this important step paves the way for Somalia to receive deep relief on its remaining debt,” said Ine Eriksen Søreide, Minister of Foreign Affairs of Norway.

Norway is one of the countries keen to invest in Somalia's oil and gas industry, which recently got a node from Mohamed Abdullahi Farmajo's administration, after signing of controversial Petroleum Law.

The clearance of IDA’s arrears is an opportunity to lock in Somalia’s turnaround, noted Abdirahman Duale Beileh, the finance minister for Somalia.

“As we enter this new course, we look forward to strengthening our collaboration with the World Bank Group and building on the pillars we have laid so far to boost the economy and bring prosperity to our people,” he said.

“We are also grateful to the support from Norway which enabled us to clear arrears with IDA," added the veteran leader, who is also championing for Somalia diaspora to help rebuild the country's economy.

In a meeting of the Bank’s Board last week, Executive Directors expressed support for the government’s strong record of fiscal, political, social and economic reforms in recent years which enabled Somalia to reach this major milestone.

They noted their expectation that in addition to accessing new IDA resources, Somalia would also work with the International Finance Corporation [IFC] and the Multilateral Investment Guarantee Agency [MIGA] to support the development of its private sector.

The International Development Association [IDA] is one of the largest sources of funding for fighting extreme poverty in the world’s poorest countries, World Bank noted.

IDA provides zero- or low-interest loans and grants to countries for projects and programs that boost economic growth, build resilience, and improve the lives of poor people around the world, it added.

Since 1960, IDA has provided more than $391 billion for investments in 113 countries. As an institution of the World Bank Group, IDA combines global expertise with an exclusive focus on reducing poverty and boosting prosperity in the world’s poorest countries.

GAROWE ONLINE