(MENAFN) In a significant development aimed at alleviating Somalia's financial burdens, the Paris Club of creditors, which includes major global economies such as Russia, the United States, and several European nations, has reached an agreement to cancel USD2 billion of Somalia's debt. This announcement, made on Wednesday, comes as a result of a debt forgiveness program overseen by the International Monetary Fund (IMF) and the World Bank, signaling a crucial step forward in Somalia's path to economic recovery.
Under the terms of the agreement, the Paris Club will write off 99 percent of the debt owed by Somalia, providing the African nation with much-needed relief from its financial obligations.
Finance Minister Bihi Egeh expressed optimism about the transformative impact of achieving full debt relief, emphasizing the opportunity it presents for Somalia to prioritize essential public services and invest in key sectors such as healthcare, education, and infrastructure.
The debt cancellation agreement has been hailed as a significant milestone in Somalia's journey towards financial stability and prosperity. Information Minister Daud Aweis described it as a "big milestone" that will contribute to the country's overall recovery efforts and enable it to pursue its poverty reduction objectives effectively.
Somalia's debt burden traces back to the era of Siad Barre's military regime, which ended in 1991. Since then, interest has accumulated on loans obtained during that period, exacerbating the country's economic challenges. Additionally, Somalia has grappled with internal conflicts, including a civil war that erupted in 2009, further straining its resources and hindering economic progress.
However, with the debt relief initiative and its eligibility for support under the Heavily Indebted Poor Countries Initiative (HIPC), Somalia now stands poised to embark on a new chapter of financial stability and sustainable development. The Paris Club's decision to cancel a substantial portion of Somalia's debt underscores the international community's commitment to supporting the country's efforts to rebuild and recover from years of economic hardship and instability.
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