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Reprieve for Somalia as Global Lenders Writes-off $4.5 Billion Debt

Storyline:Business, National News

WORLD BANK: International lenders have agreed to write-off a $4.5 billion debt, marking the culmination of a decade-long process of negotiations and reforms.

This historic decision marks the conclusion of a process that spanned over a decade involving negotiations and significant economic reforms implemented by the Somali government.

Somalia, which is just settling into the East African Community (EAC) after its admission two weeks ago, has been exempted from debt repayment under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, a program aimed at ensuring that the world’s poorest nations are not burdened by overwhelming debt.

The move by multilateral and bilateral lenders, including the World Bank, International Monetary Fund (IMF), significantly reduces the country’s debt to $600 million from a high of $5.2 billion, according to the World Bank.

Somalia’s external debt has now declined to less than six percent of GDP, from 64 percent in 2018.

A huge chunk of the debt relief has been made available by commercial creditors ($3 billion), followed by multilateral creditors ($573.1 million), World Bank’s International Development Association ($448.5 million), IMF ($343.2 million) and African Development Fund ($131 million).