Somalia to rejoin global financial system after securing debt-relief deal

This IMF video clip looks at how the IMF and World Bank have approved HIPC status for Somalia, eradicating 90% of the economy's external debt, or $4.5bn, allowing for greater government spending on more productive areas of the economy such as healthcare and education. The hope is that this will strengthen social safety nets, boosting the prospects for sustainable growth in this war-torn economy.

External debt relief can provide many benefits for low-income countries like Somalia. Here are a few key advantages:

• Increased investment: Debt relief can free up resources for countries to invest in areas such as education, healthcare, and infrastructure, which can help to boost economic growth and development.
• Reduced poverty: By reducing debt service obligations, countries can use their resources to fund poverty reduction initiatives, such as social safety nets and targeted investment in the poorest regions.
• Improved stability: Debt relief can help to reduce political instability, as it can remove a major source of tension between governments and their creditors.
• Increased access to international financial markets: Debt relief can improve a country's credit rating, making it easier to access international financial markets and attract foreign investment.
• Greater autonomy: Debt relief can help countries to break free from the control of international creditors, giving them greater autonomy to pursue their own development agenda.