Somalia secures agreement to settle $36 million debt with OPEC Fund

From left: Saudi Arabia Minister of Finance Mohammed bin Abdullah Aljadaan, OPEC President Dr. Abdulhamid Alkhalifa and Somali Minister of Finance Bihi Iman Egeh during the signing of the agreement in Vienna, Austria on June 26, 2024. (Photo: X/Bigi Egeh)

By Vincent Ombati
Thursday, June 27, 2024

The Saudi Finance Minister highlighted the Kingdom's efforts to boost non-oil revenues and diversify its economy as part of Saudi Vision 2030 through labour market reforms.

The Federal Government of Somalia has gotten relief after reaching an agreement on settling its debt with the Organisation of the Petroleum Exporting Countries (OPEC) Fund amounting to $36 million dollars (Sh4.6 billion).

The arrears will be cleared with the help of the Saudi Arabia Kingdom who stepped in to facilitate the loan bridge.

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Somali Minister of Finance Bihi Iman Egeh entered a three-way agreement with OPEC President Dr. Abdulhamid Alkhalifa and Saudi Arabia Minister of Finance Mohammed bin Abdullah Aljadaan in Vienna, Austria during the OPEC Development Forum and Ministerial Meeting.

"We are grateful for the support from the Kingdom of Saudi Arabia with the bridge loan to facilitate this," Bihi posted on his official X handle.

While signing the agreement, Bihi implored the step taken will unlock new opportunities and resources from the OPEC Fund that will help in national development.

"This is another milestone that supports macroeconomic stability and economic stability of the country," said Bihi.

Mohammed bin Abdullah said the plan was to help Somalia to recover economically and reduce its debt burden.

From left: Saudi Arabia Minister of Finance Mohammed bin Abdullah Aljadaan, OPEC President Dr Abdulhamid Alkhalifa and Somali Minister of Finance Bihi Iman Egeh during the signing of the agreement in Vienna, Austria on June 26, 2024. (Photo: X/Bigi Egeh)

He further outlined plans to finance the country in line with the International Monetary Fund (IMF) and World Bank's Heavily Indebted Poor Countries (HIPC) initiative of ensuring no poor country faces an unimaginable debt burden.

The minister revealed their plan to diversify its economy to attain their vision for 2030.

He said they are working towards boosting their non-oil revenues through labour market reforms, improving the ecosystem in the private sector, and supporting small and medium-sized enterprises.

Early this year, the IMF disbursed $10 million to support Somalia boost its economic policies and reforms.

With the recovery in agriculture, higher remittances, and greater investments, the country's GDP is expected to grow from 2.8 per cent in 2023 to 3.7 per cent in 2024 according to the IMF.