Since 2016, the Federal Government of Somalia has been implementing an ambitious reform program supported by the IMF and WB in order to introduce and implement rigorous economic and financial reforms to foster economic recovery that stimulate economic growth to enable Somalia benefit from the debt relief contemplated under the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief (MDR) initiatives.

Indeed, under extensive process of engagement with IMF Staff Monitored Program Somalia reached the Highly Indebted Poor Countries (HIPC) Decision Point on March 25, 2020. Having successfully qualified to the Decision Point in record time Somalia has been accorded with immediate arrears clearance by the IMF, IDA and the African Development Bank. Also, Somalia has met the Paris Club requirements to obtain interim debt relief at the Decision Point and on 31/3/2020 the PC creditors agreed to cancel $1.4 billion US Dollars effective immediately. The agreement was concluded under the Cologne terms designed to provide maximum interim debt relief as part of the HIPC initiative. The Paris Club agreement included debt deferral of all debt service due from November 1st, 2019 until March 31, 2024.

On the other hand, the authorities have also continued to engage with Non-Paris Club creditors and other Multilateral Institutions to find ways forward `for obtaining the necessary debt relief on the remaining bilateral arrears with comparable treatment as that of the Paris Club agreement.