MOGADISHU, Somalia — The United States and Somalia finalized an agreement on Tuesday to cancel more than $1 billion in debt owed by Somalia, one of the world’s poorest nations, which has been plagued by civil war, insurgency, and climate challenges.
The agreement, signed by Somalia’s Finance Minister Bihi Egeh and U.S. Ambassador to Mogadishu, Richard Riley, was described by Riley as a “great day.” The deal forgives Somalia’s $1.14 billion debt to the U.S., which was part of a larger $4.5 billion debt relief package facilitated by the International Monetary Fund and World Bank in December.
“Somalia, with the help of the United States and our international partners, undertook a host of reforms passing new laws, changing the way it operates, bringing improved accountability to its finances and moving towards sustainable practices,” Riley stated during the ceremony.
Finance Minister Egeh expressed gratitude on X, formerly known as Twitter, for the U.S.’s “unwavering support of our economic reforms and growth.”
The U.S. Embassy highlighted that this debt relief adds to the $1.2 billion in various forms of aid provided by Washington to Somalia this year, underscoring the U.S. as a “steadfast partner” to the nation.
Economic statistics reveal that about 70 percent of Somalia’s population lives below the poverty line of $1.90 a day. Earlier in March, Somalia managed to secure another debt cancellation of over $2 billion through an agreement with international creditors, according to the Paris Club.
This financial relief comes after Somalia achieved the “completion point” under the Heavily Indebted Poor Countries Initiative, reducing its external debt from 64 percent of GDP in 2018 to less than six percent by the end of 2023.
