Muruqmaal Posted March 25, 2005 Somalia must pay arrears to win new loans - World Bank - Friday, March 25, 2005 at 14:53 Thu March 24, 2005 3:56 PM GMT+02:00 NAIROBI (Reuters) - Impoverished Somalia must clear $430 million of debt arrears to the World Bank and International Monetary Fund before the bank can start lending to the new government, a bank official said on Thursday. Somalia has lacked a central government since 1991, when the country descended into anarchy, emptying its treasury, destroying its government ministries and preventing it from servicing its debt to international lenders. A transitional federal government was formed in neighbouring Kenya last year after years of futile peace efforts and is trying to restore order in the lawless Horn of Africa state of at least seven million people. "Once a country is in arrears it cannot receive a loan from the World Bank," said Makhtar Diop, the World Bank's director for Somalia, Kenya and Eritrea. "The $430 million of arrears needs to be cleared before our institution can come in and lend money," Diop told reporters in Nairobi, the capital of neighbouring Kenya. The World Bank is working with the government to propose a debt arrears clearance programme, the bank said. He said World Bank experts were studying the legal status of the new government, aiming to forestall any attempt by Somali factions to say the debt was issued to a different government so they should not be held responsible for it. "Once we have solved this legal problem and it has been accepted in the international community that this is the government that is representing Somalia then one can start engaging as to how we solve the issue of debt," Diop said. The World Bank has earmarked $4.6 million as grants to Somalia over the next three years to support the livestock and meat industry, combat HIV/AIDS, and promote macroeconomic data analysis and dialogue, the bank said. The bank, which is also involved in plans for the relocation of Somalia's government from Kenya, is funding an assessment that will help shape any future aid for Somalia. Last month, the transitional government appealed to donors for $77.3 million for security and a relocation budget for the government for the next six months. Source: Reuters Quote Share this post Link to post Share on other sites
