Russia has granted debt relief on over $684 million owed by Somalia in a deal finalized on the sidelines of a Russia-Africa summit in St. Petersburg, officials from the Horn of Africa nation said.
Emerging from decades of civil war, Somalia is seeking to secure sweeping external debt relief under the International Monetary Fund (IMF) and World Bank’s Heavily Indebted Poor Countries (HIPC) Initiative.
“This step will play a big role in the completion of the country’s debt forgiveness process,” Somali Finance Minister Bihi Egeh said of the deal with Moscow in a post on the ministry’s Facebook page.
The agreement signed on Wednesday between Egeh and Russian deputy finance minister Timur Maksimov concerned Paris Club loans, Somali Deputy Prime Minister Salah Ahmed Jama told Russian state news agency RIA Novosti.
Jama added that, under the agreement, part of the debt would be immediately written off while part would be subject to a rescheduling of payments.
The deal with Somalia comes as Russian President Vladimir Putin seeks to leverage the summit in St. Petersburg to bolster relations with African nations and push back against Western efforts to isolate Moscow over its invasion of Ukraine.
Putin told African leaders on Thursday that he would gift them tens of thousands of tonnes of grain within months despite Western sanctions, which he said made it harder for Moscow to export its grain and fertilizers.
If Somalia continues to make steady progress on reforms, it could reach the completion point of the HIPC process by the end of 2023, which would allow it to pare its debt to around $550 million from $5.2 billion, the IMF said last October.
Somalia owed Moscow nearly $695 million in 2019, according to the IMF.