Somalia set for major debt relief as economy stabilizes

MOGADISHU, Somalia - Following stringent fiscal discipline exhibited by the Federal Republic of Somalia, the Horn of Africa nation is set for another round of debt relief, which showcases a possible upward trajectory for economic growth, paving the way for massive jobs.

Once the debt relief is approved, economic analysts argue, Somalia will have the debt-to-GDP slashed by less than 6% in a historic move that would allow it to rejoin the international financial system after roughly 30 years, Reuters reports.

With 30 years of economic downturn and lacklustre performance of various sectors of the economy, the Horn of Africa nation is set for relief under the World Bank and International Monetary Fund's (IMF) Heavily Indebted Poor Countries (HIPC) Initiative.

An IMF media advisory on Monday said Somalia was scheduled to reach the "Completion Point" under HIPC on Dec. 13, calling it "a major milestone in its development path".

On Tuesday (today), the World Bank's Executive Board will approve the Completion Point while the IMF will pen the same on Wednesday, showcasing a major comeback from economic slumber which has cost for country massive jobs.

After those approvals "Somalia will receive significant debt relief that will reduce its external debt from about 64% of GDP at end-2018 to less than 6 per cent of GDP at end-2023," the advisory said.

President Hassan Sheikh Mohamud and his delegation are in New York to discuss the economy and security of the country, which also had an arms embargo lifted a week ago, allowing the country to restructure its operations by purchasing modern weapons.

The Horn of Africa nation and IMF reached a staff-level agreement in November for a 36-month Extended Credit Facility loan of about $100 million, Reuters reports. Five months ago, Moscow granted Mogadishu a debt relief of $684 million, arguing that it would trigger forgiveness.

Under Hassan Sheikh Mohamud, the country has been witnessing massive economic transformation with security also significantly stabilised. The government anticipates that Al-Shabaab will be defeated by the end of December 2024.

GAROWE ONLINE