The Federal Government of Somalia have cleared its arrears to the International Development Association (IDA), completing the process of normalizing its financial relationship with the World Bank Group. This development will enable Somalia to borrow from the IDA for the first time in 30 Years.
Somalia repaid the debt after accessing a $365.9 million bridge loan from the Norwegian government, the World Bank said in a statement on its website. The total estimated debt was about $5.3 billion.
“I congratulate the Federal Government on reaching this critical milestone that will allow Somalia to access the strongest possible support from the World Bank Group to improve peoples’ lives,” said Axel van Trotsenburg, World Bank Managing Director of Operations. “This lays the foundations for long term economic and social recovery. I would also like to thank the Government of Norway for its generosity in facilitating the arrears clearance process.”
The clearance of IDA’s arrears is an opportunity to lock in Somalia’s turnaround, according to the IMF. “As we enter this new course, we look forward to strengthening our collaboration with the World Bank Group and building on the pillars we have laid so far to boost the economy and bring prosperity to our people,” said H.E.M. Abdirahman D. Beileh, Minister of Finance of the Federal Republic of Somalia. “We are also grateful to the support from Norway which enabled us to clear arrears with IDA.”
On February 12 and 13, respectively, the Executive Boards of the International Monetary Fund (IMF) and World Bank met, to consider Somalia’s eligibility for debt relief under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Similarly, the African Development Bank and African Development Fund approved a framework for $122.55 million to clear Somalia’s arrears same month.
More than 1 million Somalis have fled their country in recent years, many choosing ramshackle refugee camps in neighboring countries over the incessant instability and conflict back home.