(Ecofin Agency) - • Somalia has secured a debt relief agreement worth $306.5 million with the Arab Monetary Fund (AMF).
• The agreement aims to ease Somalia's financial burden and support its ongoing economic reforms.
• This deal follows Somalia’s successful efforts to reduce its international debt, including a 99% cancellation of its debt by Paris Club creditors in 2024.

Somalia has reached a significant debt relief agreement with the Arab Monetary Fund (AMF), securing a reduction of $306.5 million in its external debt. The deal, announced by Somali Finance Minister Bihi Egeh on April 9 marks a major milestone in the country's recovery efforts.

In a message shared on his social media account, Minister Egeh expressed pride in signing the agreement, describing it as "an honor and privilege." He emphasized the importance of the agreement, noting that it is crucial for Somalia’s ongoing debt relief strategy and essential for strengthening the partnership between Somalia and the AMF. This partnership is key to driving forward sustainable development and economic growth in the country.

The AMF, a pan-Arab financial institution dedicated to ensuring financial stability among its member countries, highlighted that the debt relief will significantly ease Somalia's financial pressures. It will also bolster the nation's ability to continue with vital economic reforms and sustainable development initiatives.

Somalia's economy has faced severe challenges, including decades of civil conflict, natural disasters such as droughts and floods, and a locust invasion. These issues have drained the country's resources, leaving it struggling to maintain stability. In light of these hardships, the Somali government is working hard to restore the country's debt sustainability and stimulate its economic recovery.

In March 2024, Somalia made progress by securing a 99% debt cancellation from creditors in the Paris Club, a group of 22 of the world’s wealthiest nations. This cancellation amounted to over $2 billion, part of the country’s broader efforts under the Heavily Indebted Poor Countries (HIPC) Initiative. As a result, Somalia is set to benefit from total debt relief exceeding $4.5 billion from its international creditors, after reaching the completion point of the HIPC program in December 2023.

With an external debt that previously stood at $5.3 billion, the new agreements bring Somalia’s debt down to a manageable level, reducing it to less than 6% of its GDP.