My congratulations to the federal government for successfully guiding Somalia through the third stage of the debt relief process. It is, however, not good for our leaders to intentionally mislead the public on this matter.
Government leaders and anyone who has been following the process, Somali or foreign, know that Somalia’s debts have not yet been forgiven. What happened is that the country has cleared the conditions of the third stage of the process and has now reached the Decision Point.
The government can take pride in that, and celebrate the fact we have cleared all the hurdles to the decision point.
Now we have to fulfil the conditions of the fourth stage, the completion point, which is the final stage in which Somalia’s debts will be forgiven, provided that we fulfil all the conditions. This will take, at minimum, three years and at maximum, 16 years.
We are already past the re-engagement stage, restoring relations with the world financial institutions. To reach that stage, the country had to have a constitution and get out of the transition period. This was achieved in 2012.
Between 2012 and 2016, the National Treasury, the Central Bank of Somalia Act, the Financial Governance Committee, and other measures required by the International Monitory Fund for the Staff Monitoring Program (SMP), were all completed.
The current administration of Nabad iyo Nolol has led the country successfully through the third stage. Apart from completing the works left incomplete by its predecessor, some of the important achievements of the current government include the completion of most of the remaining legislation of the Staff Monitoring Program (SMP), increased domestic revenue income, completion of the Poverty Reduction Strategy, and finding countries to pay for Somalia’s debts with the International Monetary Fund (IMF), the World Bank, and the Bank of Africa through bridge financing.
The aforementioned institutions do not forgive debts. To get these three institutions, without whom nothing can happen, to work with Somalia on the debt relief process, we had to first clear our debts with them.
Somalia owed the three institutions a combined $800 million. Could Somalia afford to pay that? No. So how was it paid?
Norway, the United Kingdom, Italy and the European Union paid our debts with the World Bank, the IMF, and the Bank of Africa through bridge financing. What this means is that these countries have paid our debts, however, we now owe them the same amount of money instead of the monetary organisations, and with interest too.
Not a single country paid off the country’s debt with the IMF, but it worked with the United Kingdom to convince the 100 member-countries of the IMF to pay off Somalia’s debt, with each country paying its share. Remember, we still have to pay our debts, but now to those countries.
The point we have reach now is the decision point. We have cleared the hurdle with the World Bank, IMF, and the Bank of Africa. This is good news that should be celebrated, and the government has the right to. But we still have a long way to go.
The World Bank, IMF and the Bank of Africa will now work with Somalia to get our remaining debt, 4.4 billion US dollars, forgiven. This is the completion point.
The Somali government has to implement the laws it had created in the previous stages and also implement the Poverty Reduction Strategy. In the previous stage, the laws had to be enacted, in this one, they have to be implemented.
If in the coming three years the World Bank, IMF and the Bank of Africa are satisfied with the implementation of all that is required, they will ask our creditors, the organisations and countries we owe, to forgive our debts.
Creditors include the Arab Monetary Fund (AMF), the Arab Fund for Economic and Social Development (AFESD), OPEC Fund for International Development (OFID), and the International Fund for Agricultural Development (IFAD).
State creditors include countries in the Paris Club, the US, Russia and Italy being the biggest lenders. We also have debts with Algeria, Bulgaria, Iraq, Libya, Romania, Saudi Arabia, Kuwait, and the United Arab Emirates.
Government leaders need only take credit for this great achievement, and do it with humility. However, it is embarrassing to say Somalia has been re-liberated. It is also irresponsible to mislead the public into believing that a long and unfinished process that is going well has been completed.
For this to be a national victory, previous administrations must be given the credit due to them, and the government must be clear with the public about the remaining challenges.