By T. Roble
The launch of the 9th National Development Plan Monday by President Mohamed Farmaajo marked yet another significant milestone in Somalia’s push for debt relief as the country expects to meet the initial debt relief threshold early 2020.
The Plan is anchored on four key pillars namely economic development, social development, inclusive politics and security and rule of law. It covers a five year period running from 2020 to 2024.
According to the Highly Indebted and Poor Countries (HIPC) initiative, countries seeking debt relief must develop an interim Poverty Reduction Strategy Paper (IPRSP). PRSPs describe the country’s macroeconomic, structural and social policies over a period of three or more years and provide strategies on poverty reduction.
For Somalia which is now heading to the Decision Point under the HIPC initiative, the newly unveiled National Development Plan can be used as an Interim PRSP enabling the country to meet one of the four requirements in the decision point stage.
This is affirmed by the foreword in the report: The current national development plan has been formulated to be compliant with the requirements for an interim Poverty Reduction Strategy Paper which will allow Somalia, as a participant of the Heavily Indebted Poor Countries (HPIC) Initiative, to apply for debt relief.
The other three requirements are, a country must be eligible to borrow from the World Bank’s International Development Association (IDA) a part of the World Bank which provides interest-free loans and grants. Somalia met that requirement last year and received the first $80 million grant in 30 years from the World Bank.
A country must also have established a track record of reform and sound policies through IMF- and World Bank–supported programs and should be established to face unsustainable debt burden that cannot be addressed through traditional debt relief mechanisms to qualify reach the decision point.