World Bank approves first loans to Somalia in 30 years

The Washington-based lender, which suspended ties with the country when war broke out in 1991, resumed support for Somalia in 2003.

By REUTERS
September 26, 2018 16:58
1 minute read.
World Bank building entrance

World Bank building entrance 370. (photo credit: Wikimedia Commons)

 
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NAIROBI – The World Bank has approved $80 million in loans to Somalia to fund public finance reforms, marking the first disbursement to the government of the conflict-ridden country in 30 years, the bank said.

The Washington-based lender, which suspended ties with the country when war broke out in 1991, resumed support for Somalia in 2003, at the time saying it would focus on HIV/AIDS and livestock programs with other organizations, but it has not approved any direct lending to the government to date.

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It reopened direct ties with Somalia’s federal government in early 2013.

Its board had approved financing of $60 million for the country’s Recurrent Cost and Reform Financing Project and $20 million for its Domestic Revenue and Public Financial Management Capacity Strengthening Project, it said in a statement late on Tuesday.
“They [loans] represent a milestone in Somalia’s development and reconstruction,” the bank said.

The bank said it would also work with the government in Mogadishu to improve services like education and healthcare, access to clean water, energy and finance for its citizens – under a program called Country Partnership Framework.

Somalia’s economy was forecast to grow by an average of between 3.5 and 4.5% annually in 2019-2022, when the partnership on social services will run, the bank said.

“While agriculture is key to the economy, it remains vulnerable to shocks. As such, services will continue to be a main driver of growth, especially in the financial, transport and communication and trade sectors,” the lender said.

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Hit by decades of conflict at the hands of clan militias, Somalia has over the past several years also been pummeled by an insurgency by al-Qaeda-linked al-Shabaab, famines and maritime piracy.

Parts of the country are still plagued by militant violence, but a degree of stability in the capital in recent years has begun to draw investment from locals and Somalis living abroad.

Last week, the International Monetary Fund said it expected the economy to grow by 3.1% this year from 2.3% in 2017, as it recovers from drought last year.

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