Financial agreement reached between the Arab Monetary Fund and Somalia for debt restructuring, intended to boost Somalia's economic renovation efforts.
Arab Monetary Fund and Somalia Sign Debt Restructuring Deal
In a significant move towards economic recovery and sustainable development, the Arab Monetary Fund (AMF) and the Federal Republic of Somalia have signed a Memorandum of Understanding (MoU) aimed at restructuring Somalia's longstanding debt to the AMF.
The MoU, signed on the sidelines of the annual meetings of joint Arab financial institutions in Kuwait, is a part of the AMF's broader strategy to promote economic resilience and long-term growth across the Arab world. This agreement is intended to ease Somalia's financial burden and reinforce its trajectory of economic reform.
Dr. Al Turki, Chairman of the AMF Board, underscored the Fund's dedication to its member states. He reaffirmed the AMF's role as a key regional institution fostering economic progress. The restructuring marks a pivotal moment for Somalia, as it embarks on a journey towards debt relief and economic stabilization.
Somalia's debt to the AMF dates back over four decades. However, the country has been steadily implementing reform measures to stabilize its economy and strengthen financial governance. The restructuring is a testament to these efforts and a significant step forward in Somalia's recovery and development journey.
As of mid-2025, Somalia remains actively engaged in implementing its debt relief strategy and in negotiations with its remaining creditors, including the AMF which is one of its largest multilateral creditors. The total external debt portfolio of Somalia stood at about USD 1.4 billion at the end of Q2 2025, with the AMF, along with the Arab Fund for Economic and Social Development and the IMF, being key multilateral creditors whose debts account for roughly 42% (about USD 593 million) of Somalia’s total debt.
While Somalia’s IMF debt remains relatively low, managing bilateral and multilateral debts including those to Arab creditors like the AMF is essential for sustaining economic growth and development. Lowering external debt burdens through restructuring can help Somalia avoid debt distress, improve creditworthiness, and create fiscal space essential for investment in social and infrastructure development.
The recent global focus on improving sovereign debt restructuring frameworks—highlighted by international forums like the Global Sovereign Debt Roundtable and discussions under the G20 Common Framework—also supports Somalia’s efforts by promoting more efficient, coordinated debt resolution processes.
In terms of economic impact, this continued engagement and progress towards debt relief are crucial for Somalia to stabilize its macroeconomic environment and free fiscal resources for development. The AMF's updated strategy emphasizes flexibility, fiscal sustainability, and closer cooperation with member nations to overcome financial challenges.
In summary, Somalia is currently in active negotiations with the AMF as part of its broader debt relief efforts. Although no finalized debt restructuring agreement with the AMF has been announced recently, these negotiations and Somalia’s commitment to debt relief positively impact the country’s economic stability and development prospects by potentially reducing debt burden, improving fiscal space, and enabling greater financial sustainability.
[1] World Bank, Somalia Economic Update, June 2025. [2] International Monetary Fund, Debt Sustainability Analysis, Somalia, June 2025. [3] United Nations Conference on Trade and Development, Least Developed Countries Report, 2025. [4] African Development Bank, Somalia Country Strategy Paper, 2022-2025.
- The restructuring of Somalia's debt with the Arab Monetary Fund is a crucial step in Somalia's journey towards debt relief and economic stabilization, marking a significant moment for sustainability and development in its business sector.
- Collaboration between Somalia and the Arab Monetary Fund, such as the debt restructuring deal, is aligned with the AMF's broader strategy to promote economic resilience and long-term growth across the Arab world, ultimately fostering development.
- The restructuring of Somalia's debt with the Arab Monetary Fund is part of a broader effort to manage and reduce external debt burdens, allowing for financial resources to be diverted towards investment in social and infrastructure development, thus contributing to economic development and finance.
