Insecurity and postponement of elections dash hopes for Somalia’s debt relief

0

By ABDULKADIR KHALIF

By JAMES ANYANZWA

By AGGREY MUTAMBO

Somalia’s long-delayed polls have placed hurdles in the country’s path to achieving full debt relief under an International Monetary Fund initiative.

According to the IMF, political uncertainty, electoral delays, security and environmental shocks have aggravated the ongoing process of ending Somalia’s short-term IMF-supported financing program, as well as derailing the realization total debt relief under the Indebted Poor Countries Initiative (HIPC). This, the IMF has warned, will make it difficult for the war-torn country to access financial support.

Laura Jaramillo, mission chief for Somalia in the IMF’s Middle East and Central Asia department, told reporters during a virtual press briefing on Thursday that continued political uncertainty and election delays risked stalling the financing program. of the IMF in Somalia.

“If the pending program review is not completed by May 17, 2022 — within 18 months of the previous review — the program automatically terminates,” Ms. Jaramillo said.

“If the Somalia program ends, it will jeopardize the disbursement of budget support grants, opening a funding gap that could lead to new domestic arrears and derail the schedule for full debt relief at the point completion of the HIPC initiative.

Somalia will depend on reaching the decision point to ensure that much of its debt to external lenders is forgiven. This is when the full amount of the HIPC initiative will be settled, bringing its national debt down to less than 10% of GDP.

Advertising

To reach the completion point, Somalia was supposed to “establish a new track record of good performance under an IMF program”, according to the agency’s requirements. Mogadishu was also expected to implement its poverty reduction strategy for at least a year as well as reform public financial management laws, including strict accountability measures.

Ms Jaramillo said the completion point “is within reach” if Somalia sticks to the agreed measures, to help unlock donor support and enable steady progress towards full debt relief.

But the country is already a year behind elections and has seen infighting between political players threaten the fragile peace. In fact, a new government elected after the elections could have the necessary legitimacy to continue the reforms.

In the calendar of postponed elections, the country has given itself until February 25 this year to organize legislative elections. Under the indirect electoral system, legislators from the Senate and House of the People met in joint session to elect a federal president. They should have done it before February 8 of last year, but they couldn’t agree on the model.

Dr Abdirahman Beileh, Somalia’s finance minister, played down fears but told The EastAfrican the country was committed to the election plan.

“Given the progress made in finalizing the electoral process, we are confident that the elections will be concluded in time so as not to affect the reform agenda,” he said on Thursday.

The IMF assessment came as international actors praised Somalia for turning its back on the elections, after months of wrangling. So far, the country has elected its full 54-member senate and also voted in 130 of the 275 seats in the People’s House, 28 of which are women. By next week, some 60 more seats will be up for grabs, according to schedules released by the Federal Election Implementation Team (FEIT). The country must reserve at least 30% of seats for women, as part of reform programs demanded by lenders to improve gender balance.

“While political tensions between some Somali leaders continue to erupt sporadically, they have so far been contained and have therefore not derailed the electoral process,” James Swan, the special representative of the secretary-general of Somalia, said on Tuesday. the UN in Somalia to the UN Security Council.

“The risk remains, however, a miscalculation could snowball these conflicting tensions.”

Somalia had, as of March 2020, received a nod from the executive boards of the IMF and the World Bank for a decision point under the HIPC. It became the 37th country to receive such debt relief, meaning its debt could be reduced from $5.2 billion at the end of 2018 to $3.7 billion. A further reduction in the HIPC completion point was to take three years, by which time its debt was to be reduced to $557 million.

The IMF has demanded reforms to reach this stage, which would also make Somalia eligible to borrow from international lenders. Somalia has been allowed to access credit to deal with the impact of Covid-19, in the meantime.

According to the IMF, “reaching this stage has required a lot of hard work and effort, not only from the Somali authorities – who have shown an incredible commitment to reform under very difficult circumstances, but also from from its donors.

But a delayed election is only part of the problem.

The militant group al-Shabaab has recently resurfaced taking advantage of the chaos to attack, according to Mr Swan.

Share.

Comments are closed.