Mogadishu(Mogadishu24)-Somali leaders including former and current politicians unanimously welcomed the approval of $4.5 billion in debt relief for Somalia by the World Bank and the International Monetary Fund on Wednesday, after reaching the Heavily Indebted Poor Countries (HIPC) Initiative’s Completion Point.

President Hassan Sheikh Mohamud expressed gratitude for the World Bank, IMF, and other international debt owners. He stated that crucial debt relief is expected to pave the way for enhanced access to critical financial resources, supporting the nation’s efforts to strengthen its economy, reduce poverty, and foster job creation.

“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,” said President Hassan Sheikh Mohamud.

“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. When my government committed to the reform program nearly a decade ago, this was the result we envisaged,” he added.

Somalia’s Finance Minister Bihi Iman Egeh highlighted Somalia’s reform journey, terming it a ‘true national process’ and expressing pride in reaching the HIPC Completion Point.

He emphasized that through enabling reforms, Somalia had consistently raised domestic revenue, strengthened public financial management, improved governance, and enhanced national institutions.

“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,” said Somalia’s Minister of Finance, H.E. Bihi Iman Egeh.

The Prime Minister of Somalia, Hamza Abdi Barre, stated that Somalia is now a debt-free country, which will provide room for future development in all sectors and attract investments and economic growth.

“Somalia is now a debt-free country and can focus on the future developments in our country with a major focus on our institutional reforms such as macroeconomic stability and economic growth . This was achieved through the collective efforts by the Somali people and the government, it has gone through years of negotiations with a lot of resilience and perseverance,” the Prime Minister said.

He underscored the recent achievements made by the federal government of Somalia, including lifting the arms embargo, admission to the East African Community, and the security progress made by the Somali National Army.

Former Somali President, Mohamed Abdullahi Farmajo welcomed the announcement made by the World Bank and IMF and congratulated the Somali people for this milestone achievements.

“I welcome the World Bank and IMF press release on Somalia reaching the HIPC Completion Point and thereby qualifying for debt relief today. I congratulate the Somali people on the successful implementation of the ECF reform program without failing once,” said Farmajo, former Somali President.

This ECF reform program included raising domestic revenue, paying salaries monthly without fail, implementing the Public Financial Management law, improving the procurement law, and renegotiating contracts against Somalia’s financial interests.

In his statement, the former President proposed three major issues to consider as Somalia enters the post-debt relief period.

• Future debt contracting is a national exercise and decision with strong parliamentary oversight. Somalia should only borrow for nationally agreed investments and not government operational costs.
• Public investment management is strengthened so that the Somali people get value for money in public investments. Every investment in Somalia must be done with public interest at its core. Procurement and concessions must be done transparently and in accordance with existing laws, with a major focus on oil and gas, which remains Somalia’s main future asset.
• International Partners need to continue supporting the economic reforms and capacity building of Somali financial and economic institutions.

The IMF regional director, Ms. Kristalina Georgieva, extended her congratulations to the people of Somalia and urged them to collectively work on the progress of the country.

“Congratulations to Somalia on reaching the completion point of the Heavily Indebted Poor Countries (HIPC) Initiative. This is a testament to Somalia’s unwavering commitment to economic reforms. The IMF will continue to build on our strong partnership with Somalia,” said Ms. Kristalina.

This debt relief involved a collective effort from various contributors. The IMF contributed $343.2 million, IDA contributed $448.5 million, the African Development Fund (ADF) offered $131.0 million, and additional support from other multilateral creditors amounted to $573.1 million.

Bilateral and commercial creditors, including members of the Paris Club and creditors from the Arab Coordination Group, played a crucial role by contributing $3.0 billion to this monumental debt relief.