Somalia has urged external creditors to cancel its international debt to enable the country access financing to support its socio-economic advancement and rebuild its war-torn infrastructure.
The African Union Commission and the Somalia Non-Governmental Organisation (NGO) Consortium, comprising international civil society organisations, have also, on behalf of Somalia, asked the external creditors to cancel the Horn of African nation’s debt so that the country can work on resettling millions of its people displaced by conflict.
“We would like to urge international financial institutions and development partners present in the room to assist the country in its development interventions by managing climate change and cancelling its debt,” said Victor Harrison, the Commissioner for Economic Affairs at the African Union.
He further said that resolving the debt situation in 2019-2020 could restore investor confidence in the country and ensure economic recovery.
Protracted armed conflict in Somalia has made the country one of Sub-Saharan Africa’s most troubled and underdeveloped countries. Worse, the government has meagre resources to meet the country’s pressing needs.
The parliamentary and presidential elections in 2012 led Somalia’s re-engagement with the international community, leading to the accumulation of external debts, with an external debt of $ 4.6 billion as at the end of 2017.
Presently, Somalia has a total of 27 known creditors that are divided into three categories: multilateral, Paris Club and non-Paris Club, with 32.8 percent, 53.8 percent and 13.4 percent owed to each respectively. The country’s top five largest creditors are the United States (22 percent), Italy (13 percent), France (9 percent), the World Bank (11 percent) and the International Monetary Fund (7 percent).
To qualify for debt cancellation, Somalia needs to convince the International Monetary Fund (IMF) to convene its board of directors to review the country’s progress.
Should the IMF board review progress and approve a debt cancellation, Somalia would be required to hold bilateral talks with private donors on the terms of debt forgiveness. If the outcome of the talks are positive, the country may very well be on its way to ending the cycle of forced displacements.
Even Gamal Hassan, Somalia’s Minister of Planning, Investment and Economy, stated that “Somalia requires cooperation because the debt cancellation would help us to ignite our national development plan.”