Somalia signs $306.5M debt relief deal with Arab Monetary Fund to strengthen fiscal recovery and boost investor confidence.
Somalia Signs $306.5M Debt Relief Deal with Arab Monetary Fund
Kuwait City, April 9, 2025 – Somalia has finalized a $306.5 million debt relief agreement with the Arab Monetary Fund (AMF), signaling a major milestone in the country’s quest to stabilize its economy and rejoin global financial systems after decades of conflict and economic hardship.
The agreement, signed in Kuwait City, restructures Somalia’s outstanding obligations to the Abu Dhabi-based institution. While specific repayment terms remain undisclosed, both the Somali Ministry of Finance and AMF confirmed the deal as a crucial component of Somalia’s broader reform agenda.
“This agreement is fundamental to our broader debt relief efforts and paves the way for deeper re-engagement with Arab and multilateral financial institutions,” said Finance Minister Bihi Egeh.
Emerging from years of civil conflict, climate shocks, and economic isolation, Somalia has begun laying the foundation for fiscal sustainability. With backing from international partners, the country has implemented tighter macroeconomic policies, institutional reforms, and domestic revenue mobilization strategies.
Somalia’s progress reached a major turning point in 2023 when it achieved the Heavily Indebted Poor Countries (HIPC) completion point under the joint IMF–World Bank framework. That milestone triggered the Paris Club to forgive over 99% of Somalia’s $5.2 billion debt to its creditor nations.
The new AMF agreement now opens doors for further concessional financing, private sector investment, and expanded access to regional economic institutions.
The AMF counts 22 Arab nations as members and has emerged as a key stabilizer for countries in financial transition. For Somalia, engagement with the fund reflects deepening ties with Gulf states, including the UAE and Kuwait—both of which have played growing roles in supporting Somalia’s recovery through aid, investment, and technical assistance.
“The AMF deal not only provides critical fiscal space, but also signals to investors and donors that Somalia is taking the hard steps necessary to rebuild its economy,” said Asha Farah, an economist at Shabelle Advisory, a Mogadishu-based consulting firm.
Despite encouraging signs, Somalia’s path remains challenging:
- Public debt fell to 32% of GDP by end-2024, down from nearly 100% before HIPC.
- Economic growth is projected at 3.6% in 2025, driven by construction and services.
- Climate shocks (drought, floods, locusts) continue to destabilize agriculture.
- Security threats and political volatility remain barriers to reform.
Still, Somalia’s government is optimistic that this new wave of debt relief and restructuring will help reinforce reform implementation and attract foreign direct investment (FDI).
“We are entering a new phase,” said Minister Bihi Egeh. “With continued support from our partners and commitment to reform, Somalia can now build a sustainable and inclusive future.”
