The journey of Somalia has just started, president says after $4.5 billion debt relief

MOGADISHU, Somalia - The journey to revive Somalia's economic fortunes has just begun, President Hassan Sheikh Mohamud has said, adding that within the next few years, the country will get back on the right trajectory as it invests in local production.

On Wednesday, the International Monetary Fund [IMF] and World Bank gave Somalia debt relief of $4.5 billion, almost clearing the $5 billion owed to the international community and multinational lenders, a huge milestone achieved after reaching Completion Point.

There was no way to repay the debt given the deep-rooted economic challenges facing our fragile country, Hassan Sheikh said. Accordingly, "we embarked on a rigorous but fruitful debt relief journey through the Highly Indebted Poor Countries Initiative [HIPC] with the International Monetary Fund [IMF]".

This, he said, required the Somali government to undertake significant and challenging yet strategic macroeconomic and social reforms to address institutional weaknesses, enhance public trust in government, transform the economy and create opportunities for our people.

Throughout the journey, the government has witnessed internal changes including having three different administrations and our four finance ministers pushing for the same agenda. Despite sharp internal political divisions, the leadership united on matters of debt relief.

"Ironically, in Somalia’s highly active and competitive political landscape, achieving debt relief was one of the key unifiers of political actors of all persuasions," observed Hassan Sheikh. "Furthermore, the process ensured there was a systematic review by the Somali government and people of their own economic history, fiscal borrowing and the socioeconomic destruction of almost three decades of civil war."

"Upon finally reaching the end of the debt relief journey, we have a credible national budget, predictable and expanding domestic revenues – which we seek to continually increase – and strengthened public financial management systems, as well as the laws, regulations and policies that all these are anchored on," he said.

But the achievement marks the beginning of a long journey towards stabilisation of the country after three decades of economic shambles and ruins, coupled with endless political wrangles and Al-Shabaab menace, which have partly derailed development.

"We plan to escape a return to the debt trap by utilising our strategic location, young population and vast natural resources to grow our economy," he notes. "We are focused on attracting investment in all our key competitive areas – agriculture, livestock, green energy and the blue economy – to create opportunities and jobs to build socioeconomic and climate resilience."

This, he averred, is enhanced by our recent membership of the East African Community, which should open new markets. In an age of interconnectivity and interdependence, fragile states like Somalia should not be left alone to bear the cost of financing global challenges such as the impact of global terrorism and climate change, he said.

Addressing these is a global public good and more accessible and predictable financing must be available to facilitate not just immediate short-term stabilisation and mitigation measures, but also long-term, scaled-up adaptation and community responses, he observed.

"This is a moment for our government and people to be proud. However, we also know that the hard work of sustaining economic reform and creating progress for our people has just started – amid the most difficult international economic environment.
As president, we made huge progress by our decisive actions and political commitment to unshackle Somalia from debt 2017-2022. We made reforms happen and our path to Completion Point clear."

IMF said the decision "will facilitate access to additional critical financial resources that will help the country strengthen its economy" while the head of Somalia’s Central Bank Abdirahman Abdullahi noted that the "decision on HIPC completion point is a huge achievement for the entire nation".

GAROWE ONLINE