After a decade-long process of negotiations and reforms with creditors, Somalia has finally secured a $4.5 billion debt write-off from global lenders as the enhanced Heavily Indebted Poor Countries (HIPC) Initiative has spared the nation from repaying its debt.

The World Bank reports that the country’s debt has significantly decreased from a peak of $5.2 billion to $600 million as a result of the action taken by multilateral and bilateral lenders, including the International Monetary Fund (IMF).

Commercial creditors have contributed $3 billion towards the debt relief, with multilateral creditors contributing $573.1 million, the World Bank’s International Development Association contributing $448.5 million, the IMF contributing $343.2 million, and the African Development Fund contributing $131 million.

Following the Bretton Woods institutions’y boards’ approval process, a historic announcement regarding Somalia’s debt forgiveness is scheduled to take place in Washington DC on December 13.

HIPC completion points were reached by 37 nations, with Somalia following suit after Zimbabwe and Sudan were left behind. Under the leadership of the current president, Hassan Sheikh Mohamud, Somalia began holding HIPC talks ten years ago, and the nation has continued on the reform path despite political obstacles.

Kristina Svensson, the country manager for Somalia at the World Bank, praised Mogadishu for its “remarkable” commitment to reform last week.

“There have been a lot of political challenges within Somalia, but this thing (principles of HIPC), has held it quite high,” she said.

“This is satisfactory for them (Somalia) to achieve debt relief,” said Ms. Svensson. “Both the World Bank and IMF as well as other international partners, have been essential to providing technical assistance to support the achievement of these triggers.”

Over the past few weeks, Somalia has achieved huge milestones in its efforts towards socioeconomic and political liberation. It recently joined regional bloc, East Africa Community (EAC), as it seeks strategic partnerships with neighbours.

The International Monetary Fund (IMF) has urged Nigeria’s central bank (CBN) to further hike Monetary Policy Rate (MPR).

The IMF Director of Communications, Ms. Julie Kozack, in Washington DC, United States of America,
on Saturday stressing that the liquidity mop-up being undertaken by the CBN was already addressing the high inflationary rate of over 27%, but the rate must be further adjusted at its next Monetary Policy Committee (MPC) meeting.

The IMF chief also commended recent policy actions on the removal of fuel subsidy and the unification of exchange rates by the Nigerian government.

Nigeria’s short-term interest rate was reported at 17.67 % pa in Oct 2023, compared with 8.67 % pa in the previous month. The data reached an all-time high of 22.95 % pa in Mar 2012 and a record low of 0.36 % pa in Nov 2020.

In her response to questions on Nigeria, she noted that “President Tinubu has implemented two bold and important reforms shortly after taking office.

“The first is on fuel subsidies. Nigeria’s fuel subsidies were costly, especially for the budget, and not well targeted to provide relief for vulnerable households, and so this was rectified. And the second was unifying of the official exchange rate and that removed long standing distortions of the multiple exchange rate system.

“You asked a specific question on inflation. Inflation in Nigeria is running very high. It reached over 27 percent in October, that is the year-on-year number.

“The Central bank, under its new leadership, has started to withdraw excess liquidity that was in the system and contributing to high inflation.

“The next Monetary Policy Committee meeting should further raise policy interest rate. So, the Central bank is taking action to try to address the high inflation problem. As we mentioned in our Article IV Consultation, which was held in February of 2023, raising revenue from the very current low revenue to GDP ratio of 9 percent is essential to create fiscal space for social and development spending. 9 percent of GDP is a very low revenue to GDP ratio, and it is really not high enough to be able to support strong social safety nets, and development spending, to help protect vulnerable households and also to meet Nigeria’s development needs.

”The 2024 budget aims to reduce the fiscal deficit while also creating space for these priority spendings, both on the social side and also on the development side.”