Russia cancels and extends debt of nearly 700 million USD for Somalia

Russia agreed to write off part of Somalia's $684 million debt, with the remainder deferred.

"This step will play an important role in completing the country's debt relief process," Somali Finance Minister Bihi Egeh posted on Facebook today, following the agreement signed between him and Russian Deputy Finance Minister Timur Maksimov on the sidelines of the Russia-Africa summit in St Petersburg.

Somali Deputy Prime Minister Salah Ahmed Jama said under the agreement, part of the debt will be written off immediately, while the rest will be deferred.

After decades of civil war, Somalia is seeking to secure foreign debt relief under programs of the International Monetary Fund (IMF) and the World Bank's Highly Indebted Poor Countries (HIPC) Initiative.

The deal between Somalia and Russia comes as Russian President Vladimir Putin seeks to strengthen ties with African nations and push back against Western efforts to isolate Moscow over the Ukraine war.

President Vladimir Putin speaks at the Russia-Africa Summit in St. Petersburg on July 27. Photo: AFP

Mr Putin told African leaders attending the conference that Russia would provide tens of thousands of tonnes of grain for free within months, despite Western sanctions.

The International Monetary Fund (IMF) said that if Somalia continues to make steady progress on reforms, it could reach the completion point of the HIPC process by the end of 2023, allowing Somalia to reduce its debt from $5.2 billion to about $550 million. Somalia's largest creditor is currently the United States, which owes about $1 billion.

This is the second time Moscow has hosted a Russia-Africa summit, after the first in 2019. Russia said 49 of the 54 African countries are attending the event, including 17 heads of state. The event is scheduled to run until July 28.

Huyen Le (According to Reuters )

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