Turkey clears part of Somalia's IMF debt
ANKARA, Turkey - Efforts by the Federal Government of Somalia to clear outstanding debts mostly owed to international lenders are paying off as Somalia struggles to kickstart her economy which has been in shambles for several decades due to unending civil wars and terrorism.
Turkey, which is a close associate of Somalia, has granted $3.4 million to the International Monetary Fund, which is part of the debt Somalia has been struggling to pay. This is part of the initiative that started early this year to relieve the heavy debts of low-income countries.
An International Agreement issued on Nov. 5 on the Official Gazette shows that Ankara contributed some $3.4 million to Somalia for the IMF’s Enhanced Heavily Indebted Poor Countries [HIPC] initiative. The amount Turkey granted to Somalia’s debt relief corresponds to 2,372,189 of special drawing right [SDRs].
Usually, the SDRs, based on dollars, euro, yen, sterling, and yuan, is the IMF’s official unit of exchange. Member countries hold them at the fund in proportion to their shareholdings, and they have capacities to help struggling nations.
On March 25 this year, the IMF returned some 11.9 million SDRs to Turkey, to compensate for the loss of income by the fund’s non-performing interest receivables and the Special Contingency Account. Ankara granted some 2.3 million SDRs out of the aforementioned figure to Somalia’s debt relief initiative at the rate of Ankara’s quota share.
Turkey and Somalia have been in close contact and cooperation since 2011 when the then prime minister and incumbent President Recep Tayyip Erdoğan visited the country during a catastrophic famine. Ever since, Turkey provided infrastructural, humanitarian, and medical assistance to the east African country.
Earlier in March, the IMF and the World Bank approves Somalia’s eligibility for debt relief under the HIPC initiative, a key move that will allow the Horn of Africa to lower its $5.2 billion in external debt to around $557 million.
Somalia, with a population of 15 million, is the 37th country to reach this “Decision Point” under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The decision came at a critical time for Somalia, which is grappling with the coronavirus outbreak.
Besides the economic boost on helping Somalia to clear the debt, Turkey also funds major projects in the Horn of Africa nation. Most road networks have been fixed especially since 2017 by Ankara due to a good working relationship between President Mohamed Abdullahi Farmajo and Turkey.
Also, Turkey is actively involved in training Somalia's security agents as part of the initiative to fight terrorism. In return, the country has borne the brunt of Al-Shabaab militants, with the most recent being an attempted raid at Turksom base in Mogadishu.