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IMF pledges support for Somalia’s debt relief

MOGADISHU, The International Monetary Fund (IMF) has expressed support for Somalia's efforts to secure debt relief through the lender's highly indebted poor countries program.

Kristalina Georgieva, IMF managing director who held talks with Somali Prime Minister Hassan Ali Khaire pledged to work with the membership of the Fund to secure the financial resources necessary to clear arrears to the IMF and cover the costs of debt relief.

Maintaining strong performance, together with support from international partners, will pave the way for Somalia to receive debt relief in the near future, Georgieva said in a statement issued after the talks.

According to the IMF, Somalia's external debt is about 5 billion U.S. dollars, but Mogadishu has not made a service or amortization payment since the onset of the civil war two decades ago, making it impossible to access loans from the IMF.

Georgieva said she had a good and constructive meeting with Khaire and congratulated the PM for the continued strong implementation of Somalia's economic reform program amid challenging circumstances.

We exchanged views on the importance of securing debt relief under the Highly-Indebted Poor Country (HIPC) initiative as soon as possible, she said.

During the meeting, Khaire reiterated the government's strong commitment to reforms under the current Staff Monitored Program (SMP) and stressed its completion of the ninth National Development plan, both of which aim to meet requirements of the HIPC initiative.

I assured the Prime Minister of the IMF's full support for Somalia's efforts to secure debt relief, including working with the membership of the Fund to secure the financial resources necessary to clear arrears to the IMF and cover the costs of debt relief, said Georgieva.

To qualify for the debt cancellation, Somalia needs to convince the IMF, which would possibly convene its board of directors to review the country's progress.

Should the IMF board give approval for the debt cancellation, Somalia would be required to hold bilateral talks with private donors on the terms of debt forgiveness.

In WASHINGTON, Finance Minister Abdirahman Duale Beileh said Somalia will press ahead with poverty reduction efforts and a major regional ports and corridors initiative if international creditors forgive the country's $5 billion debt this February, as expected.

He said he was heartened by progress made during discussions with officials from the United States, Somalia's biggest creditor, Britain, and others during the IMF/World Bank annual meetings this past week.

Things are looking up Everybody was positive, Beileh said in an interview.

He said U.S. and other officials were pleased with Somalia's strong performance in hitting key benchmarks in a program to work toward debt forgiveness.

Britain, the European Union and Qatar had offered to cover about $150 million of the roughly $330 million that Somalia owes the IMF, he said.

The U.S. Treasury, which is owed $1 billion by Somalia, had played a role in encouraging support from other IMF members, and was in talks with Congress about steps needed to erase the big bilateral debt pile.

They were very skeptical when our government started, but now they are saying Somalia has travelled enough, he said.

Once it obtains debt relief, Somalia is negotiating to receive grants worth about $300 million per year for the next three years, Beileh said.

That will allow it to start spending on projects to reduce poverty by improving education and healthcare, shoring up water and electricity supply and investing in other critical infrastructure projects, he said.

After 30 years with little international support, Somalia has needs on every corner, he said. The country is in bad shape, and that is an understatement. You name it, we need it.

Beileh said Somalia was also working with neighbours Kenya, Eritrea, Ethiopia and Djibouti on a five-year, $15 billion project to establish ports and transportation corridors.

Backed by the EU, the African Development Bank and the World Bank, the project will help boost trade in the region, he said.

Somalia is very committed to doing its part. I think we really have turned the corner. And when people are committed, they will do miracles, he said.

Source: NAM News Network