Somalia is expected to get major debt relief this week, slashing its debt-to-GDP ratio to less than 6% in a historic move that would allow it to rejoin the international financial system after roughly 30 years.
The war-scarred East African country is set for the 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 December 13, calling it “a major milestone in its development path”.
The World Bank's executive board is expected to approve the Completion Point on Tuesday and the IMF's board on Wednesday.
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% of GDP at end-2023,” the advisory said.
Earlier this month the United Nations Security Council lifted a three-decade-long arms embargo on Somalia that was put in place to cut the flow of weapons to feuding warlords after a civil war broke out.
The Horn of Africa nation and IMF reached a staff-level agreement in November for a 36-month Extended Credit Facility loan of about $100m (R1.9bn) .
In July, Somalia said Russia had granted it relief on $684m (R13.02bn) of debt, saying it would play a big role in its debt forgiveness process.
Reuters
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