The political conflict between the federal government and the Puntland administration could threaten Somalia’s hopes of being forgiven by the International Monetary Fund (IMF) and other multilateral lenders by the end of this year, as economists warn. the country.
Hussein Abdikarim, the former adviser to the president of Somalia, said that the strengthening of financial transparency is a prerequisite for Somalia to receive debt forgiveness, as well as more loans from the International Monetary Fund (IMF).
“If Somalia fails to continue the steady progress it has made in financial reforms, it may lose the hope of being forgiven its debt of $5.2 billion by the end of 2023,” added Hussein Abdikarim.
In February 2020, the executive boards of the IMF and the World Bank announced that Somalia was eligible for debt relief following economic and institutional reforms.
In October 2022, the IMF said its staff had reached a working-level agreement with Somalia that would allow $10 million to be disbursed to Somalia, subject to review and approval by the board.
“The lack of competitive procurement, the lack of agreement between the federal government and the member states of the federation on financial federalization, and the lack of transparency in oil and gas agreements are the main current challenges that could threaten the development of Somalia. ” Hussein Siyad, an independent consultant in the field of economics, and the former deputy minister of finance of Somalia, said this in an interview given to VOA radio station.
Somalia’s foreign debt is estimated at more than 5 billion dollars.
Countries that qualify for the Heavily Indebted Poor Countries (HIPC) initiative of the IMF and the World Bank must commit to economic and financial reforms, as well as poverty reduction and political stability.
