The nation, which has been weakened by decades of conflict, has qualified for the enhanced Heavily Indebted Poor Countries Initiative, with its debt forecast to be reduced to $557m in net present value terms within three years.
James Swan, head of the United Nations Assistance Mission for Somalia said the country has passed an historic milestone on its path to “peace and prosperity”.
“Achievement of the HIPC decision point is a major step forward for Somalia’s economic progress, allowing the country to advance towards its long-term objective of inclusive economic growth and poverty reduction,” Swan said.
“All Somalis can be proud of this achievement”.
The country has agreed to maintain macroeconomic stability; implement a poverty reduction strategy; put in place a set of reforms focused on financial stability, improve governance and debt management, strengthen social conditions, and support growth in order to reach the HIPC completion point.
The HIPC Initiative is a framework allowing creditors to provide debt relief to the world's poorest and most heavily indebted countries to ensure debt sustainability, therefore reducing the constraints of economic growth and poverty reduction imposed by unsustainable debt-service burdens.
According to the IMF, 37 countries have qualified for the initiative, including Somalia, of which 36 have reached the completion point for debt reduction.
In addition, the World Bank is considering a range of new investments to the country, focusing on immediate relief for communities impacted by flooding and the recent locust invasion as well as preparing for the threat of the coronavirus pandemic.
Somalia began talks with the international authorities at the beginning of this month, after four years of government reforms to help meet the HIPC decision point.
