Somalia has reached its debt relief milestone. Now the real work begins : Dr Hassan Sheikh Mohamud, president of Somalia / The Guardian / Tom McDermott

I have worked in two different periods of Somalia's recent history, the first period towards the end of the dictatorship of Siad Barre and the beginning of the civil war. My second period came 20 years later during one of the more violent periods of the country's long history of instability.

During the early days of the civil war the introduction of foreign troops, first under the US military, and then under the African Union and UN did much to worsen that instability, as did the misuse of foreign aid which too often was tied to military action against rebel groups. The fact that the troops sent to 'stabilize' the country came mostly from Somalia's longest standing enemy, Ethiopia, and its close ally, Uganda, must count as one of the greatest blunders in the history of 'peacekeeping' forces.

The UN and its donors struggled in their attempts to create a national government based on a democratic form of government, a concept alien to Somalia's traditional system of local governance through clans and family structures. Ironically, the 2000-2007 period under the Islamic Courts Union, despite its strict religious code, maintained a semblance of order through its understanding of the traditional clan system. However, its suppression by foreign forces only served to radicalize the youth, giving rise to the enduring threat of al-Shabaab.

Now that the appetite of other states for intervention in Somalia's affairs has lessened, there is a chance - albeit slim - that the country can find its feet.   The economic and political success of the northern breakaway Somaliland and to a lesser degree its neighbor, Puntland, provides an example of what can be done with good leadership and a willingness to work with traditional local governance structures.

The article linked below is by the current President of Somalia, Dr. Hassan Sheikh Mohamud, and points to the opportunity provided by the recent approval by the IMF of a $4.5 billion debt relief package.  Dr. Hassan also lays out some of what Somalia now needs to accomplish in the short breathing space debt relief offers.  Unsaid here is the challenge facing the government in ensuring that the benefits of debt relief and new development funds do not stay in Mogadishu and a few urban areas, but instead reach deep into the rural population.

Tom McDermott

Click here to read the full article in the Guardian 

Summary:    

Dr. Hassan argues that Somalia (meaning south and central regions and the capital of Mogadishu)  has come a long way towards reforming its national institutions.  

The fact remains, however, that while progress has been made, there remains a much longer road ahead in institutional reform and especially in achieving détente with rebel groups like al Shabab, who still control large areas of the country.  

On the more general theme of debt relief efforts for the LDCs - considerable skepticism among donor nations has held back action on debt relief efforts in recent years, yet it remains a critical element in recovery for many of the least-developed countries. Earlier debt relief initiatives like the Toronto Terms offered limited forgiveness, and often focused on rescheduling payments and reducing interest rates, but didn't go far enough to address the underlying debt burden. In addition, conditionality was often imposed by creditors: Debt relief was often tied to stringent economic reforms prescribed by the IMF and World Bank, which sometimes hampered LDC development priorities and proved difficult to implement.

Dr. Hassan argues that: 

- Somalia has suffered under unsustainable debt for over 30 years, totaling over $5 billion. As a fragile post-conflict state, Somalia embarked on a long and challenging debt relief process through the IMF's HIPC initiative, requiring major economic reforms.

- Achieving debt relief took nearly a decade across multiple administrations. It forced Somalia to systematically review its economic history and rebuild state institutions around public financial management, governance, transparency, domestic revenue generation, and public services.

- Reforms focused on fundamentals like budgeting, revenue collection, data to inform policy, anti-corruption laws, and vision-setting for more inclusive economic growth. Despite security and climate challenges, Somalia stayed the course.

- Support from bilateral and institutional partners providing technical help, budget assistance, and encouragement was invaluable. It's a lesson that engaged international partners can accelerate reforms even in difficult contexts.

- Debt relief brings normalized international relations, access to new financing, proof Somalia can reform beyond being a "failed state," and hope. But debt sustainability remains a challenge given global economic troubles.