Russia has forgiven $684 million in debt due by the Somali government in a significant gesture of goodwill, easing the country’s debt burden.
In the presence of Deputy Prime Minister Salah Ahmed Jama, Finance Bihi Iman Egeh and Russia’s Deputy Minister of Finance, Timur Igorevich Maksimov, signed the agreement on Wednesday in St. Petersburg.
The Russian agreement comes as the Russia-Africa Summit begins in St. Petersburg, underscoring Russian corporations’ rising interest in Africa. The debt relief is likely to help Somalia’s economy, which has struggled to recover from decades of violence and instability.
Russia’s action follows similar debt-forgiveness schemes launched by other governments and international organisations. Norway announced debt forgiveness of $1.8 million in January 2020, while the African Development Bank cleared $122.55 million in arrears in March 2020 as a result of contributions from the United Kingdom and the European Union. In April 2020, Somalia’s Paris Club creditors agreed to discharge $1.4 billion in obligations owing to them, accounting for 67% of the debts owed to Paris Club creditors.
The US has promised to eliminate $1 billion in debt by 2024, when Somalia is scheduled to achieve the Completion Point under the Heavily Indebted Poor Countries (HIPC) initiative. The International Monetary Fund (IMF) and the World Bank collaborated on the HIPC programme, which aims to decrease the debt load of qualified nations to sustainable levels.
The debt load has been a substantial impediment to Somalia’s economic progress, with debt payment expenses accounting for a sizable percentage of the country’s budget. The debt forgiveness efforts are anticipated to assist Somalia in redirecting resources into development and poverty reduction programmes.
Russia’s debt forgiveness is a key step towards relieving Somalia’s financial burden and restoring its economic stability.
The action is also intended to boost connections between Russia and Somalia, as well as contribute to Russia’s expanding collaboration with African countries.