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Friday, May 20, 2022

Norway to provide $359m loan to Somalia

Somali government will be provided with a $359 million bridging loan by the Norway government by next year.

The Norwegian government said the amount is meant to clear the debt owed to the World Bank’s International Development Association.

In a statement on Thursday, the government of Norway stated that it is proposing a short term loan of NOK 3.135 billion which will be used to settle the arrears due to the World Bank.

“The Government has proposed that Norway should provide a short-term bridging loan of NOK 3.135 billion to Somalia in 2020 to clear Somalia’s debt arrears to the World Bank’s International Development Association,” the statement read in part. “Technically, this is a loan to Somalia, but the funds will be transferred to a World Bank account. The World Bank will then grant Somalia a new loan, which will be used immediately to repay the bridging loan from Norway.”

Minister of International Development Dag-Inge Ulstein said “Somalia’s debt arrears to Norway amount to NOK 16 million. If Somalia receives debt treatment in the Paris Club under the HIPC initiative, this debt will be canceled,’

Mr. Ulstein will participate in a roundtable meeting on Somalia during the World Bank’s Annual Meetings in Washington next week.

Somalia’s external debt amounts to approximately USD 4.7 billion, and debt cancellation is a key priority for the Somali Government.

A third of the debt is owed to the multilateral development banks, the World Bank and the African Development Bank, and the International Monetary Fund (IMF).

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