East Africa grouping on Friday welcomed the African Union’s call for cancelling Somalia’s debt towards the pan African body’s member states.
Mahboub Maalim, executive secretary of the Inter-Governmental Authority on Development, said debt cancellation would go a long way to improve lives of Somalis who have been adversely affected by three decades of unfavorable conditions in all aspects of their day-to-day life.
“The Executive Secretary views debt cancellation as a means towards enhancing peace, security, development and durable solutions for displaced Somalis,” Maalim said in a statement.
“Somalia’s efforts at peace consolidation are constrained by the debt burden that prevents it from accessing concessionary financing and normalizing relations with International Financial Institutions (IFIs),” he added.
The International Monetary Fund (IMF) in early 2018 pledged to prioritize Somalia’s debt relief, saying every effort is being made to speed up the process.
According to the IMF, Somalia’s external debt is about 5 billion U.S. dollars, but Mogadishu has not made a service or amortization payment since the onset of the civil war two decades ago, making it impossible to access loans from the IMF.
Maalim expressed his unwavering support to the AU call in regards to the “IFIs that have pledged financial support, to step up their good faith efforts and accelerate the normalization of financial relations with Somalia.”
He reiterated the regional bloc’s support to Somalia’s journey to peace and lasting development, and recalled that Somali people deserve a peaceful and prosperous Somalia.
He concluded that a normalized Horn of African nation will be a major player towards regional integration in the sub-region.
To qualify for the debt cancellation, Somalia needs to convince the IMF, which would possibly convene its board of directors to review the country’s progress.
Should the IMF board give approval for the debt cancellation, Somalia would be required to hold bilateral talks with private donors on the terms of debt forgiveness.
Somalia started lobbying for debt cancellation during the 32nd Ordinary Session of the Assembly of the African Union which ended in Ethiopia on Monday.