Thursday December 14, 2023
Mogadishu (HOL) - Somali leaders and politicians welcomed the approval of $4.5 billion in debt forgiveness by the International Monetary Fund and the World Bank for Somalia on Wednesday, after the Horn of Africa nation completed years of financial reforms under the Heavily Indebted Poor Countries Initiative, or HIPC.
President Hassan Sheikh Mohamud stated that securing this significant debt relief is a testament to the unwavering spirit and commitment of the Somali people. He asserted that it opens doors to a brighter future of prosperity and development for all.
Speaking at a government event celebrating the debt relief in Mogadishu on Wednesday night, Prime Minister Hamza Abdi Barre underlined that Somalia has left the list of countries in debt. This achievement will enhance the country's and its people's trust, attracting international investors and fostering economic development.
The Prime Minister emphasized that the government has achieved great milestones, including success in the war against al-Shabab, joining the East African Community (EAC), lifting the arms embargo, and soon taking over security responsibilities from AU troops.
Somalia's Minister of Finance, Bihi Iman Egeh, highlighted the reform journey's depth and breadth, "Despite external challenges such as regular climatic shocks and the ongoing fight against international terrorism, we are proud to have reached the HIPC Completion Point. Through our enabling reforms, we have consistently raised domestic revenue, strengthened public financial management, improved good governance and central banking operations, and enhanced the capacity of our national institutions."
A former Minister of Finance of the Federal Government of Somalia celebrated the achievement, expressing pride after ten years of the reform process. This included fulfilling around 70 targets, including core legislations, policies, and regulations.
Former President Mohamed Abdullahi Farmaajo expressed pride in meeting the majority of the benchmarks to achieve the Completion Point during his presidency from February 2017 to May 2023. These benchmarks included raising domestic revenue, paying salaries monthly without fail, implementing the Public Financial Management law, improving procurement law, and renegotiating contracts against Somalia's financial interests.
Farmaajo suggested three points to look forward to:
- Future debt contracting should be a national exercise and decision with solid parliamentary oversight, focusing on nationally agreed investments and not government operational costs.
- Strengthening public investment management to ensure value for money in public investments, with transparency and adherence to existing laws in procurement and concessions, particularly in oil and gas, Somalia's main future assets.
- Urging international partners to continue supporting economic reforms and capacity building of Somali financial and economic institutions.
Former Prime Minister Hassan Ali Khaire described the debt relief as a practical victory for the Somali people and expressed gratitude to the international partners who supported the government in securing this significant stage.
Speakers of the parliament and regional state leaders also congratulated the entire Somali nation on the success achieved in the debt forgiveness process, which has been ongoing for a long time.
The Central Bank of Somalia highlighted the considerable progress made by the Somali government in implementing sound economic reforms toward macroeconomic stability and sustainable development.
CBS Governor Abdirahman M. Abdullahi underscores the importance of this milestone. "The Central Bank of Somalia (CBS) has played an important role in the HIPC process. We are proud to have been an integral part of this remarkable journey. Today's decision on HIPC completion point is a huge achievement for the entire nation, and I would like to take the opportunity to congratulate all Somalis for this wonderful day."
The debt forgiveness presents a unique opportunity to Somalia, allowing the redirection of resources towards crucial development projects and access to new funding opportunities to support key national priorities further.
The initiative was launched in 1996 by the IMF and the World Bank to help the world's poorest countries achieve debt sustainability.