Paris Club creditors cancel $1.4Bln of Somalia’s debt

The Paris Club of creditor countries have agreed to restructure Somalia’s external public debt with an immediate cancellation of $1.4 billion.

The decision cancels 67% of the debts owed to Paris Club by Somalia.

Several of Somalia’s Paris Club creditors, including the United States, the UK and Norway, as well as the World Bank and the IMF, urged Paris Club members to provide “generous” debt relief to Somalia after more than nine hours of discussions by videoconference, according to Reuters.

Somalia has been pushing for the cancellation of its ballooning debt, some of which date back over four decades ago when the country was fighting the regime of Siad Barre, who was toppled in 1991.

Somali Finance Minister Abdirahman Beileh called the decision a big step forward for his country. “Somali government would hold separate bilateral discussions with the creditors to finalize the process” he said, adding that his government would continue the economic reforms it had undertaken over the past eight years to enable the debt relief.

The Paris Club’s decision comes after the African Development Bank, the World Bank, and the International Monetary Fund canceled $823 million out of the country’s $927 million debt.

Beileh said Somalia, which was affected by a recent desert locust problem, was not ready financially to deal with the coronavirus crisis, and has sought monetary aid.