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Debt treatment -
March 31, 2020

Supporting agreements with the international institutions

IMF programme supported by the arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) approved on March 25, 2020

Download the IMF report: EFF document

Download the IMF report: Decision Point Document for the Enhanced Heavily Indebted Poor Countries (HIPC)

Total external debt of the country

$3 051 million of which being due to Paris Club as of November 01, 2019

Amounts treated

$2 625 million of which $1 358 million being canceled, of which $1 266 million being rescheduled

Accorded treatment

Debt relief of its external public debt, this country having reached its Decision Point under the enhanced initiative for the Heavily Indebted Poor Countries (enhanced HIPC Initiative) in March 2020

Categories of debt treated

Treatment of arrears as of October 31, 2019

Treatment of maturities falling due from November 01, 2019 up to March 31, 2023

Repayment profile

Treatment under Cologne terms

  • repayment of non ODA credits over 23 years, with 6 years of grace
  • repayment of ODA credits over 40 years with 16 years of grace

Representatives from Kuwait Fund for Development, Saudi Fund for Development and the Abu Dhabi Fund for Development also attended the meeting as observers. They expressed their support to the terms of the agreement between the Paris Club and the Government of Somalia and indicated their willingness to provide to Somalia comparable terms under the framework of Enhanced HIPC Initiative and in accordance with terms and conditions adopted by their respective Boards of Directors.

Specific provisions

Good will clause

Given the decision by Participating Creditor Countries to contribute to the exceptional assistance in favour of the Government of the Federal Republic of Somalia under the Enhanced HIPC Initiative, the Participating Creditor Countries declare their readiness in principle to hold a meeting at the Completion Point designed to examine the question of the Federal Republic of Somalia’s outstanding debt stock and to make the necessary effort in favour of the Federal Republic of Somalia to allow it to reach the objective of its debt sustainability in the context of an equitable burden sharing among creditors, provided that:

- the Government of the Federal Republic of Somalia maintains satisfactory relations with the Participating Creditor Countries and a sound reform track record;

- the Executive Boards of the IMF and the IDA decide that the Federal Republic of Somalia has reached its Completion Point under the enhanced HIPC initiative.

Furthermore, in response to the request of the representatives of the Government of the Federal Republic of Somalia, if as at 1st April 2023, the Federal Republic of Somalia has not reached its Completion Point under the enhanced HIPC initiative, the Participating Creditor Countries agree in principle to a meeting to consider the matter of the Federal Republic of Somalia's debt service payments falling due after 31st March 2023, provided:

- that the Federal Republic of Somalia continues to have an appropriate arrangement with the International Monetary Fund;

- that the Federal Republic of Somalia has made all reasonable efforts to reach with other creditors effective arrangements meeting the conditions described in the Agreed Minutes dated 31st March 2020 and has reported in writing to the Chairperson of the Paris Club;

- and that the Federal Republic of Somalia has complied with all conditions set out in the Agreed Minutes dated 31st March 2020.

Phases

  • First phase : From November 01, 2019 up to March 31, 2021, implemented at the signature of the agreement
  • Second phase : From April 01, 2021 up to March 31, 2022
  • Third phase : From April 01, 2022 up to March 31, 2023

Comparability of treatment provision

The Federal Republic of Somalia was declared eligible to the Enhanced HIPC initiative by the IDA and the IMF in February 2020 and was declared to have reached its Decision Point in March 2020. In this context, the Federal Republic of Somalia commits to seek promptly from all its external creditors which are not participating in the Agreed Minutes dated 31st March 2020, their appropriate contribution in terms of debt relief to the enhanced HIPC initiative, on top of traditional debt relief mechanisms and consistent with the proportional burden sharing based on their relative exposure in net present value of total external debt at Decision Point after the full use of traditional debt relief mechanisms.

The appropriate nature of the debt relief provided will be assessed not only on the basis of the reduction in the net present value of the debt as computed under Appropriate Market Rate, but also on the terms of repayment of the debts not cancelled. For this purpose, all relevant elements will be taken into account, including the level of cash payments received by those creditors as compared to their share in the Federal Republic of Somalia’s external debt, the nature and characteristics of all treatments applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Federal Republic of Somalia and creditor countries not listed in the Agreed Minutes dated 31st March 2020.

Consequently, the Government of the Federal Republic of Somalia commits not to accord any category of creditors a treatment more favourable than that accorded to the Participating Creditor Countries

Cut-off date

October 01, 1984

Organisation of the session

The meeting was chaired by Mr. Guillaume CHABERT, Co-Chairman of the Paris Club.

The head of the debtor country's delegation was Dr. Abdirahman D. BEILEH, Minister of Finance.

Observers
  • ABU DHABI, BRAZIL, CANADA, FINLAND, KUWAIT, SAUDI ARABIA, SWEDEN, SWITZERLAND

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