# Debt relief opened the doors

> In December 2023 the IMF and World Bank approved $4.5 billion of debt relief for Somalia, and its foreign debt fell from 64% of the economy in 2018 to under 6%.

Source page: https://calankii.com/en/forces/debt-relief-opened-the-doors/
Last checked: 2026-11-12
Publisher: Calankii (https://calankii.com)

## The force

For decades Somalia owed old debts it could not pay, so most lenders could not work with it. In December 2023 Somalia reached the "completion point" of the Heavily Indebted Poor Countries scheme, bringing $4.5 billion in debt relief ([IMF](https://www.imf.org/en/News/Articles/2023/12/13/pr23438-imf-and-world-bank-announce-us-4-5-billion-in-debt-relief-for-somalia)). External debt fell from 64% of GDP in 2018 to under 6% at the end of 2023. The Paris Club of lender countries cancelled its claims in March 2024 ([World Bank](https://shorthand.worldbankgroup.org/reforms-and-relief-how-somalia-turned-a-page-amid-a-global-debt-crisis/)).

## Who backs it

- **The IMF** followed with a new three-year credit programme of about $100 million ([IMF](https://www.imf.org/en/News/Articles/2023/12/13/pr23437-imf-concludes-the-sixth-review-of-the-extended-credit-facility-for-somalia)).
- **The World Bank** holds a Somalia portfolio of $2.34 billion, mostly grants, including $523 million in regional projects ([World Bank](https://www.worldbank.org/so)). In August 2025 it approved a $125 million grant for revenue, private business, renewable power, microfinance, drought insurance, seafood exports and broadband ([World Bank](https://www.worldbank.org/en/news/press-release/2025/08/08/world-bank-renews-support-for-reforms-to-boost-economic-resilience-in-the-federal-republic-of-somalia)).
- Its cash-transfer programme, Baxnaano, reaches more than 3.7 million people ([World Bank](https://shorthand.worldbankgroup.org/reforms-and-relief-how-somalia-turned-a-page-amid-a-global-debt-crisis/)).

## How fast it is moving

Foreign direct investment reached $880 million in 2025, up 15% from $765 million ([Central Bank of Somalia, Annual Report 2025](https://centralbank.gov.so/wp-content/uploads/2026/08/Annual-Report_2025.pdf)). The World Bank says the share of its Somalia money actually paid out rose to 29.4% in 2026, from 24% a year earlier, which it ranks "top tier" in the region ([Dawan](https://www.dawan.africa/news/exclusive-world-bank-says-somalias-development-financing-ranked-top-tier-clarifying-the-dispute-over-the-state-of-the-economy)).

## What holds it back

Growth is slowing because of drought and aid cuts. The World Bank expects 2.8% growth in 2026 and the IMF 2.3% ([World Bank](https://www.worldbank.org/en/news/press-release/2026/05/13/somalia-growth-continues-but-shocks-and-aid-cuts-intensify-risks-to-jobs-and-livelihoods); [IMF](https://www.imf.org/en/news/articles/2026/10/05/pr26319-somalia-imf-staff-concludes-2026-article-iv-consultation-mission)). The IMF also says Somalia needs stronger checks on money laundering to attract foreign banks.

## Outside the country

Debt relief came alongside other signs of return: a UN Security Council seat for 2025 and 2026, Somalia's first since 1971 ([Eastleigh Voice](https://eastleighvoice.co.ke/somalia/48065/somalia-elected-non-permanent-member-of-un-security-council)).

## What it means for young Somalis

Businesses grow where investors trust that their money is safe. Debt relief told the world Somalia can be trusted again. Money that builds businesses and pays wages can now come in.

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