Somalia has reached the completion point of the Heavily Indebted Poor Countries (HIPC) Initiative, leading to significant debt service savings from the World Bank and International Monetary Fund (IMF). These savings are intended to bolster the nation's economy and provide access to additional resources. This announcement coincides with the sixth review of Somalia's Extended Credit Facility arrangement with the IMF.
The completion of the HIPC initiative grants substantial debt relief to Somalia, with contributions coming from the IMF, the International Development Agency (IDA), and other creditors.
Somalia’s President, Hasaan Sheikh Mohammud, reflected on this milestone in a press release. He stated, "Somalia's debt relief process has been nearly a decade of cross governmental efforts spanning three political administrations. This is a testament to our national commitment and prioritization of this crucial and enabling agenda. For Somalia to move forward in the positive economic direction we all needed, we had to reform our laws, systems, policies, and practices. Reaching the HIPC Completion Point is the fruit of these reforms."
Launched in 1996, the HIPC initiative was designed to assist countries in managing their debt burden. It is supplemented by the Multilateral Debt Relief initiative and offers complete relief on eligible debt from the IMF, World Bank, and African Development Fund for countries that successfully complete the HIPC program.
Somalia’s Minister of Finance, Bihi Iman Egeh also shared his thoughts on this achievement. He said, "Somalia's reform journey has been a true national process culminating in the remarkable success of determined economic reform implementation despite external challenges such as painful 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. We will build on these successes going forward."
On December 13, the IMF announced the completion of the final review of Somalia’s extended credit arrangement, which was first approved in 2020 as a three-year agreement combining the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF). According to a news release on the same day, the Executive Board is also considering a new arrangement under the ECF that would not take effect until the current agreement expires.