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IMF and World Bank Consider Somalia Eligible for Assistance Under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative

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Via IMF (Den Internationale Valutafond)

IMF and World Bank Consider Somalia Eligible for Assistance Under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative







February 13, 2020















The Executive Boards of the International Monetary Fund (IMF) and World
Bank met, on February 12 and 13, respectively, to consider Somalia’s
eligibility for debt relief under the Enhanced Heavily Indebted Poor
Countries (HIPC) Initiative. The Executive Boards commended the
authorities’ sustained commitment to economic and institutional reforms
under challenging circumstances and agreed that Somalia is eligible for
assistance under the Enhanced HIPC Initiative based on a preliminary
assessment.
This assessment is an important step towards forgiveness of most of
Somalia’s debt, which measured US$5.3 billion at the end of 2018.

Following the IMF Executive Board discussion on Somalia on February 12,
2020, Kristalina Georgieva, Managing Director and Acting Chair,
said:

“Today’s agreement by the IMF Executive Board that Somalia can be eligible
for debt relief under the Enhanced HIPC Initiative marks a historic moment.
It provides a clear recognition of Somalia’s sustained commitment to key
economic and financial reforms under consecutive staff-monitored programs
with the IMF. Helping Somalia achieve debt relief and unlock access to the
needed resources to increase growth and reduce poverty is a key priority
for the IMF. I am very grateful to our members for all their support in
this endeavor.”

Following the World Bank Executive Board discussion on February 13, 2020, David Malpass, World Bank Group President, said:

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“Today was an important step towards Somalia resuming financing from
international financial institutions, including IDA, our fund for the
poorest countries. I congratulate Somalia for embracing important reforms
that can do much to encourage sustainable poverty reduction, and I thank
our international partners who have worked with us to bring Somalia to this
important stage. We are glad to have worked closely with the Federal
Government of Somalia in assisting their progress over the past few years
and look forward to opportunities for greater World Bank Group support for
the Somali people.”

To complete the journey to the HIPC Decision Point, Somalia’s
performance under the current IMF Staff-Monitored Program (SMP) will
need to be confirmed as satisfactory, and the authorities will need to
either clear their arrears to multilateral creditors or agree a
strategy to clear them. World Bank staff expect to present the
operation for clearing the arrears to the International Development
Association (IDA) by the end of February 2020. In addition, the
agreement on the reforms that Somalia will need to implement to reach
the Completion Point—the floating Completion Point triggers—will need
to be finalized taking account of the views expressed by the Executive
Boards. Prompt action on these items could result in Somalia reaching
the Decision Point by the end of March 2020.

Once Somalia has reached the Completion Point, it would qualify for
unconditional debt relief under the HIPC Initiative, and for debt relief
under the Multilateral Debt Relief Initiative (MDRI) from the World Bank’s
IDA and the African Development Fund (AfDF), together with beyond-HIPC
assistance from the IMF. Paris Club creditors are also expected to provide
further beyond-HIPC assistance at the Completion Point.

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The HIPC Initiative

The HIPC Initiative is a framework, created by the IMF and World Bank, in
which all creditors, including multilateral creditors, provide debt relief
to the world’s poorest and most heavily indebted countries, thereby
reducing the constraints on economic growth and poverty reduction imposed
by the debt-service burden. To date, 36 countries have reached both their
Decision Points and Completion Points under the Enhanced HIPC initiative.

Learn More about the HIPC initiative process here

.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Wafa Amr

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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