Wiping out the debt should allow the country to move from the current situation
Somalia’s public debt should be cancelled to help bring the humanitarian crisis in the country to an end, World Vision argues.
Speaking during the Somalia Partnership Forum was held in Brussels in July, World Vision said that the country’s £5.1 billion of debt should be wiped out, to enable it to move beyond the current situation.
The director of advocacy and external engagement for World Vision in Somalia, Geeta Bandi-Phillips, said: “Somalia can’t even afford infrastructure to help its own people, let alone afford its debt”; so the UK Government should push for international creditors to cancel it.
“If the debt was cancelled,” she said, “then Somalia would be able to access development funds from international financial institutions like the World Bank and the IMF, which means they will be able to build infrastructure to help their own people, from hospitals to schools.
“Somalia’s external debt is about 5 billion U.S. dollars, but Mogadishu has not made a service or amortization payment since the onset of the civil war two decades ago, making it impossible to access loans from the IMF”
“The international-development and humanitarian sector won’t benefit if the debt is cancelled: only Somalia will benefit, and its people. If this happens, Somalia will slowly come out of the humanitarian situation, and so eventually countries can withdraw.”
She urged the Government to give a lead on this: “The UK has a big clout in the international community, and they should use this to help the people of Somalia.”
More than 2.6 million people are currently internally displaced in Somalia, owing to floods, conflict, and a cyclone, which, World Vision said, amounted to a “humanitarian crisis”.
There are about 5.4 million people in need in Somalia: that is close to 50 per cent of the country that need humanitarian aid to survive. Malnutrition cases are going up, and the projections are that there will be 1.2 million children by the end of 2018 who are malnourished.
“People are still recovering from the very severe drought from 2017, the cyclone which happened earlier this year, and the floods which happened following that. There are currently 2.6 million displaced people in Somalia.”
The moral case for cancelling Somalia’s debt, she said, was that “this is a debt that was created during the reign of Said Barre [dictator of Somalia 1969-91], who took the loans wherever he could, and it all went bust from there. . . The modern-day Somalia did not exist in the same shape then; it is a different country, one that has been coming out of civil war for years.
“The current government is trying to put the pieces together and build the country slowly. Why should the future generations of Somalia put their futures at stake and pay the debts that they have not created?”
According to the IMF, Somalia’s external debt is about 5 billion U.S. dollars, but Mogadishu has not made a service or amortization payment since the onset of the civil war two decades ago, making it impossible to access loans from the IMF.
Countries that in arrears to the IMF and the World Bank are not eligible for debt relief, nor can they receive funding through the World Bank’s International Development Association (IDA).
These arcane rules on arrears are excluding Somalia from one of the largest development financing pots. As many policy influencers gather in London, they have an opportunity to change this picture.
In an interview with the Financial Times, Hassan Ali Khayre, the prime minister, said of efforts to establish a functioning administration: “Now we have turned a page and taken bold steps, we are hoping the world will take a little more risk on Somalia.” Mr Khayre, a former aid worker and oil executive, said the government had a budget of only $274m.