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Boost for Somalia as UK, EU offsets $123m arrears to AfDB

Wednesday March 25, 2020

MOGADISHU (HOL) - Somalia’s journey to debt relief inched closer Tuesday with the clearance of the country’s arrears to the African Development in what is set to unlock access to much needed credit.

The AfDB announced Tuesday the payment in full of $122.55 million by the UK and European Union ‘marking the end of sanctions and the resumption of full re-engagement between the Bank Group and the East African nation.

“The long road to resolution of Somalia’s debt arrears began in 2014 and included the completion of three Staff Monitored Programs of the International Monetary Fund, and significant advances on a fourth program,” the Bank said in a statement.

Somalia’s Finance Minister Abdirahman Beileh hailed the development as a new beginning for his country. “The settlement of the arrears of Somalia to the African Development Bank, is a new beginning for us in Somalia. We stuck with our reforms, we were persistent, and it has paid off”.

insidenewsSomalia’s arrears to the AfDB amounted to about 3% of the country’s international debt which is estimated at $5.4 billion. The clearance of the arrears today takes Somalia closer to the Decision Point under the Highly Indebted and Poor Countries (HIPC) initiative.

The IMF announced early this month it had secured the commitment of 100 members to offset Somalia’s debt to the Fund while Norway honoured its pledge this month also to clear the country’s arrears to the World Bank amounting to $366m in form of a bridging loan to Somalia.

AfDB President Akinwumi Adesina praised Somalia for instituting reforms necessary to allow the debt clearance.
“I commend the government of Somalia for their diligence in implementing reforms, and the UK government and the European Union for paying off Somalia’s arrears to the African Development Bank Group. Together, we got it done for the people of Somalia,” said Adesina.

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