The Federal Government of Somalia has on Monday received a debt-relief boost of $75 million grant from the World Bank in an effort to strengthen its efforts to build strong institutions. These grants is aimed to help the country towards full and irrevocable debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.

This debt relief is also an achievement towards implementing ambitious reforms to build functional institutions, attract investments and achieve economic growth in line with the National Development Plan which focuses on different priority areas, that are supported by the Development Policy Financing.

“This DPF supports the government’s aspirations to build the foundations of a modern economy with strengthened institutions. It also signals the significant progress Somalia has made in terms of institution-building and economic development, paving the way for a more stable and sustainable future,” said Kristina Svensson, World Bank Country Manager for Somalia.

The finance minister of the Federal Government of Somalia, Bihi Iman Egeh, expressed gratitude to the World Bank for their timely support, emphasizing its importance to the country’s economic reform.

“The FGS is truly grateful for the timely budget support from @WorldBank. The support at this vital time of implementing our successful economic reform program will ensure we are able to continue our efforts to build a strong and inclusive economy,” said Bihi Iman Egeh, Somalia’s Minister Of Finance.

The grant from the World Bank comes at a important time when Somalia’s both houses of parliament jointly approved the 2023 budget, amounting to $917 million. The financial boost will enhance Somalia’s capacity to establish functional institutions.

In addition to implementing institutional reforms, Somalia has successfully negotiated debt relief agreements with major creditors, including the World Bank, International Monetary Fund (IMF), and the Russian Government.

Last week, the government of Russia exempted $640 million of debt relief to the Federal Government of Somalia in an agreement signed in Saint Petersburg between Mr. Bihi Iman Egeh, Somali Minister of Finance, and Timur Igorevich Maksimov, Deputy Minister of Finance of Russia.

Somalia is also currently engaged in discussions with some remaining bilateral and multilateral creditors, in an effort to achieve debt relief.

Despite facing several challenges, Somalia has managed to maintain macroeconomic stability. The country’s institutional reforms and strengthened financial systems have played a vital role in its journey towards debt relief, which will clear the loans contracted during the pre-civil war era.