Somalia on the verge of reaching completion point on global Debt relief

MOGADISHU, Somalia - Somalia is on the verge of reaching the completion point of the Heavily Indebted Poor Countries [HIPC] which automatically paves way for debt forgiveness next year, in what could be a gigantic milestone in the recovery of the country's economy.

The International Monetary Fund [IMF] on Monday reached a staff-level agreement with the Horn of Africa nation, which will now allow for the release of $10 million, once the money is approved by the international lender's n
board.

Laura Jaramillo, the IMF mission chief, said the decision came after Somalia's Extended Credit Facility was reviewed in Nairobi. She praised Somalia's economic reforms despite a prolonged drought, the impact of Russia's war in Ukraine, and continued security concerns.

Should Somalia continue with robust progress in reforms, she noted, it is likely to reach the HIPC completion point on global debt forgiveness by 2023. This, she said, will allow the country to pare its debt to around $550 million from $5.2 billion, Jaramillo said.

"That would be a tremendous milestone," she said, noting it would reduce Somalia's debt to around 7% of gross domestic product from around 90% now.

Further, she said, the milestone would also open up new sources of financing for Somalia, a big help as the country works to implement development programs and promote growth and employment. Somalia has been struggling with the economy for over three decades.

Besides the inter-clan wrangles and persistent political squabbles, the country is facing the worst drought in several months which has also impaired sources of livelihoods. Besides this, Somalia is struggling to contain global terrorism following heightened Al-Shabaab activities.

Somalia's outlook remained clouded, with GDP growth for 2022 projected at 1.9%, down from 2.9% in 2021, and inflation projected to reach 9% from 4.6% in 2021, the IMF said in a reprieve statement issued on Monday.

GAROWE ONLINE