Somalia has received US$4.5 billion in Debt Relief from the International Monetary Fund (IMF), the World Bank, and bilateral and commercial creditors. The debt relief was approved under The Group of Twenty (G20) major economies’ Heavily Indebted Poor Countries (HIPC) programme.
Why is it important: The approved debt relief will reduce Somalia’s external debt from 64 per cent of GDP in 2018 to less than 6 per cent of GDP by the end of 2023. According to the IMF total debt service savings for the country of US$4.5 billion in nominal terms will cover the dollar value of the stock of arrears accumulated at the end of 2022 and forgiven debt service over some time, based on the end-2022 exchange rates.
The bottom line: The country's GDP growth is projected to be 2.8% in 2023 and 3.5% in 2024, driven by private consumption. Its Inflation is also projected to be 4.2% in 2023 and 4.0% in 2024. These promising figures, the debt relief and the consistent implementation of the newly agreed five-year Country Partnership Framework with the World Bank will provide Somalia with the opportunity to access the international credit markets and start the journey of economic development and job creation.