World Bank Grants Somalia $75m in Debt Relief

TUESDAY AUGUST 01 2023

People walking in the Hamarweyne market of Mogadishu, Somalia. PHOTO | JP LOPEZ | AFP

By XINHUA

The World Bank said Monday it had provided a 75-million-US-dollar grant to Somalia to help bring the country closer to debt relief.

The global lender said the grant is the second in a series of two grants that are helping the country make progress on its path to qualify for full and irrevocable debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.

It said the government is implementing an ambitious reform program to build institutions, attract investments, and achieve inclusive economic growth and job creation, aligned with the ninth National Development Plan which outlines numerous priority areas for moving the country forward, several of which are supported by this Development Policy Financing (DPF).

Kristina Svensson, World Bank country manager for Somalia, said in a statement that the DPF supports the government's aspirations to build the foundations of a modern economy with strengthened institutions. "It also signals the significant progress Somalia has made in terms of institution-building and economic development, paving the way for a more stable and sustainable future," Svensson added.

The World Bank said Somalia has approved new laws that establish the institutional environment in key sectors such as fisheries and electricity to develop high-potential sectors for economic growth.

It said a new investment and investor protection law was enacted to mobilize much-needed private capital to develop these sectors. "Despite multiple shocks, Somalia is maintaining macroeconomic stability. These institution-building reforms take Somalia closer toward the goal of attaining debt relief, which will wipe away the legacy of loans contracted during the pre-civil war era, thereby turning a new page in the country's development trajectory."

Also, a digital identification law was approved, which can support better know-your-customer protocols, alongside a data protection law to provide safeguards on the use of personal data to help increase access to finance, said the World Bank.

According to the World Bank, the DPF supports the building blocks of harmonized customs regimes across Somalia, which can encourage cooperation, increase trade, raise revenues, and simplify procedures for the private sector. "Alongside efforts to implement institutional reforms, Somalia has signed debt relief agreements with major creditors and is holding discussions with some remaining bilateral and multilateral creditors," it said.