The African Development Bank Group has approved full debt relief for Somalia following the country’s successful completion of the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative, marking a major milestone in its economic recovery and reform journey.
The approval clears all African Development Fund (ADF) loans owed by Somalia for the 2024–2039 period, reducing the country’s external debt by $17.68 million and creating much-needed fiscal space for national development priorities.
The HIPC Initiative, launched by the World Bank and IMF in 1996, aims to ease unsustainable debt burdens for eligible low-income countries that commit to strict macroeconomic and poverty-reduction reforms. The 2005 Multilateral Debt Relief Initiative (MDRI) expanded this framework by providing 100% cancellation of eligible debts from major multilateral lenders, including the IMF, IDA, and the African Development Fund.
Somalia qualified for full debt cancellation after demonstrating strong progress in macroeconomic stability, public financial management, domestic revenue mobilisation, and governance reforms. The government also met key poverty-reduction benchmarks, including expanded basic service delivery and improved safety-net systems for vulnerable households.
“Somalia has earned this moment through determination and discipline,” said Bubacarr Sankareh, the Bank Group’s Lead Operations Advisor for Somalia. “Debt relief opens the door for stronger institutions, better services, and brighter prospects for Somali citizens, with impacts felt in classrooms, clinics, farms, and markets across the country.”
With the debt burden lifted, Somalia is expected to redirect resources toward public services, infrastructure rehabilitation, teacher recruitment, clean water initiatives, and restoration of the health system, particularly in drought- and conflict-affected regions. Officials say the move will reinforce economic resilience and help transition the country from emergency humanitarian support toward long-term, state-led development.
Debt relief is also expected to boost Somalia’s creditworthiness and unlock greater concessional financing from development partners. This will support the implementation of the government’s National Transformation Plan (NTP-1) and broader reconstruction efforts.
Somalia’s achievement follows a series of reforms pursued since clearing arrears to the African Development Bank Group in March 2020, when it paid off an estimated $122.6 million. Completion of the HIPC process in December 2023 triggered full debt-relief commitments from multilateral creditors, which together will reduce the country’s total external debt from $5.2 billion in 2018 to about $557 million after full delivery.
The AfDB described the move as a significant step toward sustainable development, improved governance, and strengthened state institutions in Somalia.
