Somalia Secures 99% Debt Cancellation From Paris Club Creditor Nations

PARIS, Reuters: Somalia secured the cancellation of 99% of the debt it owed to members of the Paris Club of creditor nations, the Paris Club said on Wednesday, a milestone in the war-scarred country’s efforts to rejoin the international financial system.

Countries including the United States, Japan and Russia cancelled more than $2 billion of Somalia’s debt, the Paris Club, a French finance ministry body that acts as a secretariat for many creditor countries, said in a statement.

The Horn of Africa country was eligible for more than $4.5 billion of debt relief from all creditors after in December reaching the end of a debt forgiveness initiative overseen by the International Monetary Fund (IMF) and World Bank.

Somalia reached the “Completion Point” of the Heavily Indebted Poor Countries Initiative (HIPC), having been exiled from the international financial system for more than 30 years marked by instability and civil war.

“Paris Club creditors welcomed the Federal Republic of Somalia’s determination to continue to implement a comprehensive poverty reduction strategy and an ambitious economic reform program to create the foundations for sustainable, inclusive economic growth,” the Paris Club said.

Somalia’s $5.3 billion external debt would be reduced to less than 6% of gross domestic product by the end of 2023, from 64% at the end of 2018, the IMF and World Bank said in December.