Somalia lauds AU decision to back debt cancellation efforts

Somalia has welcomed the African Union’s decision to support Mogadishu’s plans of seeking an international debt cancellation which would allow the country to receive international assistance.

Ahmed Isse Awad, minister for foreign affairs and international cooperation, said the country’s peace and development goals are constrained by the debt burden that prevents it from accessing concessionary financing and normalizing relations with international financial institutions.

“The African Union’s decision mirrors the fundamental spirit of cooperation and support that exists within the AU fraternity,” Awad said in a statement issued on Tuesday evening in Mogadishu.

He said the Horn of Africa nation is working hard to undertake fiscal and economic reforms to achieve debt relief and attain sustainable development.

The minister said the debt cancellation for Somalia would act as a means to one of the durable solutions being sought by the African leaders to end the cycle of forced displacements.

According to experts, violent extremism has made Somalia one of Sub-Saharan Africa’s most troubled and underdeveloped countries as the government struggles with inadequate resources to meet the country’s pressing needs.

In early 2018, the International Monetary Fund (IMF) pledged to prioritize Somalia’s debt relief, saying every effort is being made to speed up the process.

According to the IMF, Somalia’s external debt is about 5 billion U.S. dollars, but Mogadishu has not made a service or amortization payment since the onset of the civil war two decades ago, making it impossible to access loans from the IMF.

To qualify for the debt cancellation, Somalia needs to convince the IMF, which would possibly convene its board of directors to review the country’s progress.

Should the IMF board give approval for the debt cancellation, Somalia would be required to hold bilateral talks with private donors on the terms of debt forgiveness.

Somalia started lobbying for debt cancellation during the 32nd Ordinary Session of the Assembly of the African Union which ended in Ethiopia on Monday.

During the meeting, the African Union Commission and international partners called upon external creditors to cancel Somalia’s debt to allow the war ravaged country to access financing to support its socio-economic advancement.

Source: Xinhua

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