The International Monetary Fund (IMF) officially recognized the Somali government on Friday, ending a 22-year-long break in relations.
The move could enable the IMF to provide technical support and policy advice to Somalia, as well as opens the way for donors and other development banks to resume relations with the impoverished nation, Reuters news agency reported.
However, the IMF will not lend money to Somalia until it clears a $352 million debt it owes to the organization, the BBC reported.
“The International Monetary Fund today recognized the federal government of Somalia, headed by President Hassan Sheikh Mohamud, paving the way for the resumption of relations after a 22-year interval,” the IMF said in a statement.
“The decision is consistent with broad international support and recognition of the Federal Government.”
Earlier, the U.S. said it will work with the World Bank and the IMF to help Somalia clear the debt, even as the Western governments are gradually beginning to re-engage with the Somali government since the new president was elected by the parliament last year.
Somalia had been without an effective central government since President Siad Barre was overthrown in 1991.
Academic and civic activist Hassan Sheikh Mohamud defeated the incumbent Sheikh Sharif Sheikh Ahmed in a presidential runoff in September 2012, the first presidential vote by MPs held on Somali soil since 1967.
Somali government has been competing for control of the country with the Al-Qaeda backed Islamist insurgents, including the Al-Shabab group.
In March, the U.N. Security Council had agreed to partially lift a decades-old arms embargo on Somalia for one year, allowing the government in Mogadishu to buy light weapons to strengthen its security forces to fight the Islamists.