The Paris Club of creditor countries has agreed to restructure Somalia’s external public debt with an immediate cancellation of 1.4 billion U.S. dollars.

Somalia has been pushing for the cancellation of its ballooning debt, some of which dates back over four decades ago when the country was fighting the regime of Siad Barre, who was toppled in 1991.

The agreement between Somalia and the Paris Club creditor nations was reached on Tuesday evening under the so-called “Cologne terms,” as part of an initiative to provide interim debt relief to heavily indebted poor countries.

Somali finance minister Abdirahman Beileh welcomed the debt cancellation and vowed to continue with economic reforms to help rebuild the country.

In time, debt relief will help Somalia reduce its external debt to $557 million in net present value terms from $5.2 billion at the end of 2018, the IMF and the World Bank said.


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