The Paris Club consortium of lenders, which counts Russia, the United States, and several other prominent global powers among its members, has officially agreed to waive $2 billion in debt owed by Somalia, as announced on Wednesday.
Following the completion of a debt relief program overseen by the International Monetary Fund and World Bank, the group will forgive 99% of the funds owed by the African nation.
In addition to Russia and the US, the Paris Club includes Belgium, Denmark, France, Germany, Italy, the Netherlands, Japan, the United Kingdom, Norway, and Spain.
Somali Finance Minister Bihi Egeh expressed that the full cancellation of debt will significantly impact Somalia’s future, enabling the government to allocate resources towards essential public services.
Somalia has committed to combat poverty by investing in healthcare, education, and fundamental infrastructure.
Information Minister Daud Aweis described the debt forgiveness agreement as a significant step in Somalia’s path to financial recovery.
Somalia became eligible for debt relief under the Heavily Indebted Poor Countries Initiative (HIPC) in December, potentially receiving up to $4.5 billion in support.
The majority of Somalia’s debt was accumulated during the military regime of Siad Barre, which ended in 1991, with interest accruing on loans issued during that era.
The country faced internal conflict in 2009, leading to clashes between government forces, supported by African Union peacekeepers, and al-Qaeda-affiliated al-Shabaab insurgents.
In 2022, Somali government troops, backed by US airstrikes and African Union soldiers, launched significant offensives against al-Shabaab, reclaiming territories previously held by the group, although the conflict persists.
The World Health Organization (WHO) has highlighted the impact of conflict and instability in Somalia.
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