The meeting took place as Somalia approaches the Highly Indebted Poor Countries (HIPC) Completion Point, which is a significant milestone that will unlock new financing opportunities for the country.
The HIPC Initiative, launched in 1996 by the International Monetary Fund (IMF) and the World Bank, aims to assist countries dealing with unmanageable debt burdens.
Somalia qualified for the HIPC initiative in March 2020, regaining access to regular concessional financing and initiating debt relief.
By 2021, Somalia cleared its arrears to the African Development Bank (AfDB), IMF, and International Development Association (IDA), reducing its external debt from $5.3 billion to $3.3 billion, equivalent to 45% of its GDP.
Dr. Elmi Nur, Somalia’s Minister of Finance, hosted the hybrid event at a hangar in Mogadishu airport alongside other government ministers. Attendees included representatives from the Federal Government of Somalia (FGS), Federal Member States (FMS), and project implementation units (PIUs).
Discussions focused on addressing challenges in project implementation and finding ways to provide essential services to the Somali people.
Minister Nur expressed gratitude for the World Bank’s ongoing support, stating, “We are on track to further enhance the operational impacts of all projects and will use the lessons learned over time to improve current and future programs.”
Over the coming months, the World Bank will collaborate with the Somali government and the International Monetary Fund (IMF) to help Somalia reach the HIPC completion point.
Keith Hansen, World Bank Country Director for Somalia, Kenya, Rwanda, and Uganda, emphasized the importance of continuing to work together to ensure rapid implementation.
The prudent implementation of existing World Bank projects will establish a track record for attracting new financiers and donor partners.
The meeting concluded with an action plan detailing clear and time-bound recommendations for addressing challenges.
Kristina Svensson, World Bank Country Manager for Somalia, commended the country’s portfolio performance, stating, “It is heartening to note that the country portfolio is performing well with no outstanding issues.
We are eager to ensure this remains the case, especially since there have been many lessons learned from the last ten years of Bank programs in Somalia. We believe that the action plan agreed upon will effectively address the challenges.”
The Somali government aims to achieve complete debt relief from the IMF and other multilateral lenders by the end of 2023 through reforms aimed at boosting revenue collection and fiscal transparency.
Somalia reached agreements with Paris Club creditors in March 2020 on debt relief terms and is servicing its outstanding debt to IDA.
Once achieved, full debt relief will reduce Somalia’s debt to $557 million, or approximately 10% of its GDP, allowing the nation to address multiple challenges impacting its economic growth and development.