The Paris Club has agreed to cancel more than $2 billion debt Somalia owed its members to help the East African country restore its debt sustainability.

According to a statement issued on Wednesday, the debt relief represents 99 per cent of Somalia’s debt to Paris Club members as of January 2023.

The Paris Club is an informal group of creditor nations that aims to find workable solutions to debtor nations’ payment problems.

“Creditors welcomed and supported the commitment of Somalia to seek a treatment at least as favourable from all its other official bilateral and external commercial creditors,” said the statement.

It said the decision was made after a meeting on Wednesday between representatives of the Paris Club creditor countries and the Somali government.

The decision made followed its Completion Point under the Enhanced Heavily Indebted Poor Countries (Enhanced HIPC) Initiative approved by the International Monetary Fund (IMF) in December 2023.

Reaching Completion Points means Somalia implemented reforms agreed to when the country became eligible for debt relief and also fully normalised its relations with international financial institutions.

The statement said the Paris Club creditors committed to cancelling $1.2 billion in nominal terms under the Enhanced HIPC Initiative framework to contribute to restoring Somalia’s debt sustainability.

The statement added that Paris Club creditors confirmed their willingness to grant additional debt cancellation on a voluntary and bilateral basis for $815 million. 

(Xinhua/NAN)