MOGADISHU (Halbeeg News) – International Monetary Fund (IMF) has hinted that Somalia will qualify for full debt relief from the IM) and other multilateral lenders by the end of this year.
A team of IMF staff last week met with Somali authorities – including finance and planning minsters and the Central Bank of Somalia (CBS) governor – after which the lender said the country is making progress towards the HIPC completion point prerequisites despite some challenges.
“The authorities are committed to continue to improve revenue collection and make room for priority spending while containing discretionary expenditure pressures,” said Laura Jaramillo, who led the IMF team.
“On domestic revenue mobilisation, key reforms are ongoing on customs modernisation, a new income tax law and increasing revenue collection from large businesses including the telecom sector.”
Somalia reached the decision point for IMF debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative in March 2020, which saw its debt stock reduce to $3.7 billion from the $5.2 billion it had accumulated by December 2018.
The full debt relief will reduce Somalia’s debt to $557 million, about 10 percent of its gross domestic product, allowing it headroom to address multiple shocks affecting its economic growth and development.
Although it is already in debt distress, the Horn of African nation cannot yet access full debt relief from the IMF until it shows commitment to structural reforms that will ensure “public resources are used effectively and to the benefit of all the Somali people, and efforts to promote stronger economic growth that will lead to more jobs”.
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