The United Kingdom and the European Union cleared arrears on loans amounting to $122.55 million that Somalia owed the African Development Bank (AfDB), the institution said on Tuesday.
The AfDB said the clearance now marked the end of sanctions and the resumption of full re-engagement between itself and the Horn of Africa nation.
The process to have Somalia clear its debt began six years ago and involved the completion of three Staff Monitored Programs (SMPs) of the International Monetary Fund (IMF).
A fourth SMP, running from May 2019 to July 2020, was also underway with the first review of the program completed in September last year. The program named SMP IV focused on further efforts to mobilising revenues, strengthening public financial management, enhancing financial sector stability, and strengthening compliance with the framework for combatting the financing of terrorism.
The IMF said that a reduction of Somalia’s debt to sustainable levels will unlock access to additional financial resources to address Somalia’s development needs.
Somalia’s Minister of Finance Abdirahman Beileh expressed his delight at the development and said the clearance of the debt marked a new start for the Horn of Africa nation.
“The settlement of the arrears of Somalia to the African Development Bank, is a new beginning for us in Somalia. We stuck with our reforms, we were persistent, and it has paid off”.
AfDB President Akinwumi Adesina said the clearance of Somalia’s arrears reflected the power of partnerships and consensus building.
“I commend the government of Somalia for their diligence in implementing reforms, and the UK government and the European Union for paying off Somalia’s arrears to the African Development Bank Group. Together, we got it done for the people of Somalia.”
The AfDB said that it will immediately provide a new policy-based operation to help boost economic growth and accelerated development of Somalia.
According to the Bank, its current portfolio in Somalia totals $135 million, spanning operations in agriculture, water and sanitation, transport, social and energy sectors, and capacity building for several others of the economy.