The International Monetary Fund (IMF) and the World Bank’s International Development Association have determined that Somalia has taken the necessary steps to begin receiving debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Somalia is the 37th country to reach this milestone, known as the HIPC Decision Point.
Debt relief will help Somalia make lasting change for its people by allowing its debt to be irrevocably reduced from US$5.2 billion at end-2018 to US$557 million in net present value terms (NPV) once it reaches the HIPC Completion Point in about three years’ time. As Somalia continues on its path towards stability and development after 30 years outside the international financial system, the immediate normalization of its relations with the international community will re-open access to critical additional financial resources to strengthen the economy, help improve social conditions, raise millions out of poverty, and generate sustainable employment for Somalis.
“We welcome Somalia’s efforts to restore stability, engage with creditors, and adopt a poverty reduction strategy,” said World Bank Group President David Malpass. “Resumption of regular financing to Somalia is an important landmark, and we look forward to further economic and social progress.”
“I would like to congratulate the Somali government and people for their intense efforts over the past years leading to this momentous event,” said Kristalina Georgieva, IMF Managing Director. “Successful reform efforts have laid the foundation for inclusive economic growth and for addressing the needs of the country’s most vulnerable people. Work must continue to sustain and expand the implementation of these reforms as Somalia starts a new chapter of its history. I am confident a more resilient and prosperous future lies ahead for the people of Somalia.”
“The Government and People of Somalia are very pleased by the IMF’s and World Bank Group’s decision which allows Somalia to fully re-engage with International Financial Institutions. This decision is an important milestone which presents ample opportunities for Somalia as it relentlessly pursues its ongoing reform processes as well as its recovery and development agenda,” said Hassan Ali Khayre, Prime Minister, Federal Government of Somalia. “The journey leading to this decision required hard work, dedication and partnership. The FGS expresses its appreciation to the IMF, World Bank Group and partners for their unwavering support and to the Somali people for their patience and resilience in this journey.”
Somalia has committed to maintaining macroeconomic stability; implementing a poverty reduction strategy; and putting in place a set of reforms focused on fiscal stability, improving governance and debt management, strengthening social conditions, and supporting inclusive growth in order to reach the HIPC Completion Point. The World Bank and IMF will continue working together to provide the technical assistance and policy guidance the authorities need to achieve these goals, including in the context of the new, three-year IMF financial arrangement.
In addition, the World Bank is considering a range of new IDA investments with a focus on immediate relief for communities impacted by flooding, the locust invasion as well as preparing for the fast-moving threat of COVID-19. The leadership of the World Bank Group and the International Monetary Fund expressed thanks to their member countries of all regions and income levels, in particular Italy, Norway, Qatar, and the United Kingdom, together with the EU, whose interventions catalyzed support and provided the necessary financial resources to help Somalia reach the Decision Point.
Details of the Debt Relief Operation
At the start of the HIPC process, Somalia’s public- and publicly-guaranteed external debt was estimated at US$5.2 billion in NPV terms. Application of traditional debt relief mechanisms reduces this debt to US$3.7 billion.
Additional debt relief under the enhanced HIPC Initiative is estimated at US$2.1 billion in NPV terms. Of this amount, US$843 and US$1,225 million is projected to be provided by official multilateral and bilateral creditors, respectively.
Paris Club creditors are expected to make a decision on debt relief by the end of March 2020. The largest Paris Club creditors are the United States, Russia, Italy, and France. The IMF Executive Board has approved interim debt relief on debt service falling due to the IMF in the period between the HIPC Decision and Completion Points. At the HIPC Completion Point, Somalia’s current debt due to the IMF will be paid with the proceeds of financial contributions that have been received from over 100 IMF members, including many low-income countries.
MDRI debt relief from IDA and the African Development Bank would cancel all remaining claims at the Completion Point.
Together, Somalia’s external debt burden is expected to fall from about US$5.2 billion (110.7 percent of GDP) in NPV terms as of end-2018 to US$557 million (9 percent of GDP) once the Completion Point is reached.
IMF and World Bank Arrears Clearance Operations
Arrears to IDA were cleared on March 5, 2020 through bridge financing provided by the government of Norway, reimbursed with the proceeds of a Development Policy Grant.
Arrears to the IMF were cleared on March 25 with the assistance of bridge financing from the government of Italy, which the authorities have reimbursed using the front-loaded access under the new IMF financial arrangement.
Arrears to the African Development Bank were cleared on March 5, 2020 through bridge financing provided by the government of the United Kingdom and a contribution from the EU. The bridge loan from the UK was reimbursed by the proceeds of a Policy Based Operation Grant.
The HIPC Initiative
In 1996, the World Bank and IMF launched the HIPC Initiative to create a framework in which all creditors, including multilateral creditors, can provide debt relief to the world’s poorest and most heavily indebted countries to ensure debt sustainability, and thereby reduce the constraints on economic growth and poverty reduction imposed by the unsustainable debt-service burdens in these countries. To date, 37 HIPC countries, including Somalia, have reached their decision points, of which 36 have reached the completion point.
Created in 2005, the aim of the Multilateral Debt Relief Initiative (MDRI) is to reduce further the debt of eligible low-income countries and provide additional resources to help them reach their development objectives. Under the MDRI, three multilateral institutions – the World Bank’s IDA, the IMF and the African Development Fund– provide 100 percent debt relief on eligible debts to qualifying countries, at the time they reach the HIPC Initiative Completion Point.
1.5 million children lack treatment for severe wasting in Eastern and Southern Africa
The number represents almost half of the estimated 3.6 million children in urgent need, who are not being reached in time to save their lives or keep them from permanent development damage.
For UNICEF’s Regional Director for Eastern and Southern Africa, Mohamed M. Fall, “nothing is more devastating than seeing children suffering from severe wasting when we know it could have been prevented and treated.”
Mr. Fall highlights “some outstanding results and success stories”, thanks to the support of donors and partners, but says “the impacts of COVID19, climate change and conflict are creating the perfect storm where needs are quickly outpacing resources.”
For him, “the time to act is now.”
Crises pile up
Across the region, families are dealing with multiple crises, including rising levels of food insecurity, economic deterioration, disease outbreaks, unprecedented cycles of floods and droughts, and conflict.
Millions are having to reduce the quantity or quality of the food they eat in order to survive. In many cases, families are forced to do both.
For UNICEF, this is a looming and preventible tragedy that can, and must, be averted.
Prevention remains the best way to ensure that children survive, avoid permanent cognitive and physical damage, and evade the life-long suffering that results from childhood malnutrition.
With unhindered access and predictable funding, UNICEF believes it can work with partners to save the lives of nearly every child admitted for severe wasting.
The agency is asking for $255 million to scale up its emergency response in 2022.
Countries in the spotlight
In Angola, where people are facing the consequences of the worst recorded drought in 40 years, UNICEF and partners managed to scale up its response in the most affected provinces (Cuando Cubango, Benguela, Namibe, Huíla and Cunene), with approximately 40 per cent more children treated in 2021 compared to 2020.
In Ethiopia, the country with the largest child population in the region, the agency and partners reached an estimated 500,000 severely wasted children in 2021, but many children in the war-torn north, still need of life-saving support.
Across four regions, families are struggling for survival as a severe drought takes hold following three consecutive failed rainy seasons. According to the latest data, more than 6.8 million people in drought impacted areas will need urgent humanitarian assistance by mid-2022, many of them children.
In South Sudan, an estimated 1.4 million children under five, are acutely malnourished, including over 310,000 children suffering from severe wasting.
Last year, UNICEF and partners treated more than 240,000 children, but the situation remains urgent, as floods have killed cattle, washed away food and fields, and blocked humanitarian access.
In Madagascar, where three years of consecutive droughts created one of the worst food insecurity and nutrition crisis in decades, UNICEF and partners last year helped avert a feared famine for many families in the southern part of the country.
UNICEF and partners reached almost double the number of children with treatment for severe wasting when compared to 2020. This is estimated to have saved the lives of at least 55,000 children under five years of age.
In Somalia, more than 255,000 children received treatment for severe wasting last year. With the country undergoing one of the worst droughts ever recorded and suffering from continued violence, 1.3 million children under five, are likely to suffer from wasting this year.
In Kenya, at least 65,000 children were reached in 2021 with treatment services for severe wasting. Right now, an estimated 2.8 million people are food insecure, with 565,044 children suffering wasting -123,000 severely so – and the situation is expected to deteriorate further.
Finally, in Mozambique, insecurity continues to have a negatively impact. Last year, some 38,000 children received treatment for severe wasting, up from 10,000 the year before.
UNRWA condemns demolition of Palestinian home in East Jerusalem
The UN agency that supports Palestinian refugees, UNRWA, on Thursday urged Israeli to immediately halt all evictions and demolitions in the West Bank, including East Jerusalem, after an entire family was forced out of their long-term home the previous day.
Israeli police evicted the Salhiyya family from their two adjacent houses, according to news reports, in the Sheikh Jarrah neighbourhood in East Jerusalem early on Wednesday, and later tore down the structures – a move which UNRWA’s West Bank field office has condemned.
Staff who visited the scene on Thursday morning observed the total destruction of the property, with school bags, clothes and family photos still partially visible beneath the rubble.
Against international law
“Under international humanitarian law, the forcible transfer of protected persons, as well as the destruction of real or personal property belonging individually or collectively to private persons by Israel, as the occupying power, is strictly forbidden, except where such measures would be rendered absolutely necessary by imperative military reasons, or for the security of the population under occupation,” the agency said.
The 15-member Salhiyya family, who include an older woman and young child, had been living in Sheikh Jarrah for nearly 40 years, according to UNRWA.
The neigbourhood and tensions surrounding evictions, and attempted evictions, was at the heart of brutal fighting that erupted last year in Gaza, between Israel and the militant group, Hamas.
Arrests and injuries
Israeli forces raided the two Salhiyya houses on the property, at 3am on Wednesday, while the family was sleeping.
In a matter of hours the homes, as well as their possessions, were destroyed, UNRWA said, adding that Israeli forces injured several family members during the eviction operations.
The head of the family, Mahmoud Salhiyya, along with other relatives, was also arrested. Mr. Salhiyya had threatened to set himself on fire two days ago after Israeli forces demolished his business, located next door.
Other families at risk
UNRWA stated that sadly, cases like the Salhiyya’s are not unique as scores of Palestine refugee families in different areas of Sheikh Jarrah alone – over 200 persons, many of them children – currently face imminent threat of eviction.
Across East Jerusalem, an estimated 218 Palestinian households are at risk of displacement by the Israeli authorities, the agency said, citing 2020 data from the UN humanitarian affairs office, OCHA.
These households comprise some 970 people, including 424 children.
UNRWA called on the Israeli authorities to abide by international law and, as the occupying power, to ensure the protection of Palestine refugees and civilians in the West Bank, including East Jerusalem.
“All individuals have a right to safe and secure housing and to live in peace and dignity,” said the agency.
Agencies call for release of seriously ill child
In another development in the region, UNRWA and two other UN agencies are calling for the immediate release of a seriously ill Palestinian child detained in Israel.
Amal Nakhleh, now 18, has been held without charge for more than a year, a measure known as administrative detention. He has a rare neuromuscular disorder, according to media reports.
“Neither Amal nor his lawyers or family have been informed of the reasons for his arrest and detention. Amal suffers from a severe autoimmune disease that requires continuous medical treatment and monitoring,” they said.
Not an isolated case
The UN agencies called for his “immediate and unconditional release”, in line with international human rights law.
This is not an isolated case, they added, as currently at least three Palestinians are in administrative detention who were under age 18 when they were first detained.
“We echo the calls of the UN Secretary-General who in his Report on Children and Armed Conflict has, every year since 2015, urges Israel to end the administrative detention of children. This practice deprives children of their liberty and must immediately end.”
Widodo emphasizes importance of G20 focus on resilient health systems,
The G20 and advanced economies must work together to create a more resilient and responsive global health architecture to face future threats and pandemics, said President Joko Widodo of Indonesia in his address to the Davos Agenda 2022.
He said the International Monetary Fund should be tasked to mobilize resources to revitalize global health architecture. This should include a global contingency fund for medical supplies, building capacity in developing countries to manufacture vaccines and the creation of global health protocols and standards.
“The costs will be much lower than the losses we sustained due to the vulnerability of the system during the pandemic,” he said.
In discussion with Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, Widodo highlighted that “the G20 will play an important role in mobilizing the development of this global health architecture” and added: “I trust that advanced economies will not object to supporting such initiatives.”
Widodo – whose country holds the presidency of the G20 during 2022 – invited all global business leaders to contribute their ideas to the G20’s three key goals for 2022: creating a more resilient global health system; optimizing digital technology to support societal transformation; and driving a fair and affordable transition to clean energy and a circular economy. “The benefits must be felt by wider society,” he said, adding that six of Indonesia’s sectors are “wide open” for foreign investment – export-oriented labour-intensive industries (including health), renewable energy, infrastructure, automotive (especially electric vehicles), tourism and value-added mining.
In response to a question on how Indonesia – a nation heavily dependent on coal-fired power – could accelerate its own energy transition, Widodo said that developing countries need technology transfer and financial support from advanced economies to ensure the transition does not burden their citizens. Indonesia needs $50 billion for its renewable power sector and a further $37 billion for forestry, land use and marine sectors. “Concrete outcomes can only be achieved through strong cooperation,” he said. “Technology and financing will be key.”
The president pointed out that, as part of its roadmap to reach net zero by 2060, Indonesia had slashed the coverage area of forest fires sevenfold, from 1.7 million hectares in 2014 to 229,000 hectares in 2021. The number of hotspots fell over the same period from 89,000 to just 1,300. The country has restored 3.74 million hectares of peatlands since 2016 and rehabilitated 50,000 hectares of mangrove forests in the past year. Its mangrove-rehabilitation target is 600,000 hectares by 2024 – the most ambitious such programme in the world, providing, he said, a “carbon sink equivalent to four tropical forests”.
To finance the green transition, Widodo has initiated a carbon trading system that will deliver “results-based payments” for actions that reduce carbon emissions as well as a carbon tax on coal-fired power plants, due to start in April.
“Indonesia has the potential to be a global market leader in carbon trading and is predicted to surpass the carbon trade potential of Peru, Kenya and Brazil, as countries with the same tropical forest cover,” he said. The government also plans to raise capital by issuing environmental and social bonds, and through REDD+ projects that reduce deforestation and promote sustainable forest management.
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