The World Bank has announced that it has granted Somalia a $75 million grant to assist in the country’s efforts to achieve debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. This grant is the second in a series of two grants that are aimed at helping Somalia make progress on its path towards full and irrevocable debt relief.
The global lender praised the Somali government’s ambitious reform program, which is geared towards building institutions, attracting investments, and achieving inclusive economic growth and job creation. This program is 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, the World Bank country manager for Somalia, expressed her satisfaction with the progress made by the Somali government so far, saying that the DPF supports the government’s aspirations to build the foundations of a modern economy with strengthened institutions. She also noted that it 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.
The World Bank noted that several laws have been enacted by the Somali government to establish the institutional environment in key sectors such as fisheries and electricity, which are seen as high-potential sectors for economic growth. The new investment and investor protection law is expected to mobilize much-needed private capital to develop these sectors.
Despite multiple shocks, Somalia is maintaining macroeconomic stability, according to the World Bank. The institution-building reforms will take Somalia closer towards the goal of attaining debt relief, which will wipe away the legacy of loans contracted during the pre-civil war era, turning a new page in the country’s development trajectory.
The World Bank also highlighted the approval of a digital identification law, 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. 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.
The progress made by the Somali government towards achieving debt relief has been lauded by the World Bank, which has signed debt relief agreements with major creditors and is holding discussions with some remaining bilateral and multilateral creditors. The grant provided by the World Bank is expected to help Somalia achieve its goal of debt relief and pave the way for a brighter future for the country.