Somalia set for full debt relief by end of 2023: IMF

Somalia will qualify for full debt relief from the International Monetary Fund (IMF) and other multilateral lenders by the end of this year, the international money lender, IMF, said.

Somalia’s quest for debt relief has garnered pace in recent years prompting the international financial institutions to announce in March 2020 that the Horn of African country had reached the “decision point” after making necessary economic reforms under successive IMF Staff Monitored Programs.

This saw the country become eligible for debt relief under the Highly Indebted Poor Countries (HIPC) initiative, meaning its debt could be cut down from $5.2 billion in 2018 to a target of $557m by the end of this year.

Following a meeting last week between the IMF on one side and Somali authorities and the Central Bank of Somalia (CBS) on the other, the IMF team leader Laura Jaramillo hailed the commitment by Somali authorities “to continue to improve revenue collection and make room for priority spending while containing discretionary expenditure pressures” as key towards the country’s qualification for debt relief.

“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,” she added.

If it continues on this trajectory, Somalia will join other 31 least developed countries that have been relieved of their debts.