IMF secures $334 million pledges for Somalia's comprehensive debt relief
MOGADISHU, Somalia - The International Monetary Fund [IMF] has secured $334 million pledges from over 100 member countries for Somalia's comprehensive debt relief, as the country races against time to settle $4.5 billion debt.
Kristalina Georgieva, the IMF Managing Director, on Wednesday said the pledges are "sufficient" and would subsequently enable the Horn of Africa nation to qualify for financial assistance.
Ravaged due to decades of civil war and Al-Shabaab threats, Somalia's escalating debt had almost made it nearly impossible to receive aid from various lenders.
Once all pledges are formalized, a process will be followed of clearance of arrears to the Fund and new Fund financing that will enable the delivery of HIPC Initiative and other debt-relief to Somalia, IMF said.
This, IMF said in a statement, "will help unlock significant new amounts of development assistance and pave the way for higher and more inclusive growth".
Mogadishu administration has impressed the international lenders following radical financial reforms, which have been in the pipeline for a couple of months.
Terming the latest move as "historic opportunity for Somalia", Ms. Georgieva added that "We are firmly committed to supporting Somalia in its recovery after a long period of conflict and devastation.”
Noting the significance of the support, she lauded member states for their "generous support" towards Somalia, which is struggling to reform its economy.
World Bank, African Development Bank [ADB], Paris Club and European Commission are some of the financial institutions that pledged to pump resources to the initiative, she added.
The support, she said, "takes Somalia one step closer to the HIPC Decision Point, which will significantly reduce Somalia’s total debt and enable access to new resources to jumpstart growth and begin reducing poverty."
ADB, which is a major financial partner with many African countries, pledged $122.55 million of the total sum, the highest ever from any single institution.
Akinwumi Adesina, the bank's president, termed the move as "historic" and revealed that Somalia had secured a guarantor for the process.
“The sacrifices of the Somali people under the leadership of the FGS during the implementation of difficult and wide-ranging reforms has been recognized by the wider international community," he noted.
In response to the decision, Dr. Abdirahman Beileh, Somalia's Finance Minister, said, “the African Development Bank has accompanied Somalia through the difficult reforms, which can only make Somalia a better place for all Somalis".
Among others, Somalia has been grappling with high levels of corruption and opaqueness in financial management, making many willing lenders take a back seat.
European Union, which is also a major donor in Somalia, lauded the progress, noting that "Somalia’s public debt to multilateral institutions and bilateral creditors is $5.3 billion, more than its entire GDP."
In March, the EU added, Somalia is expected to reach a pivotal moment in the debt relief process known as "decision point".
Dr. Beileh has been credited for spearheading radical reforms in Somalia's financial sector, which have seemingly rescued the country from plunging into a prolonged economic crisis.