By Mohamed Abdirahman (Dhabancad)
Introduction
Since the year 2016, the Federal Government of Somalia in support with International Financial Institutions and Governments has carried out relentless efforts in achieving debt relief from the international Creditors. After multi-intentional processes, the World Bank Group and the International Monetary Fund had on December 2023 announced that Somalia has completed the necessary conditions and requirements to qualify at the completion point for HIPC Process.
On March 2024, a number of Creditors, mainly the Paris Club had decided to relieve the debts, whereas some other creditors were also ready to voluntarily follow the suit.[1]
Benchmarks for the HIPC Completion Point
To qualify the Heavily Indebted Poor Country Completion Point, Somalia was required to meet two broad categories of reforms as per the following:
1) Enactment of nationally agreed and endorsed frameworks and bills that govern and protect the public financial system of the country. The most important bills to have in place were among others:
a) The Fiscal federalism bill,
b) The tariff harmonization framework
c) Establishment of capable federal institutions and robust macroeconomic reforms with measurable success indicators.
The requirements were aimed to put in place functioning financial systems, effective oversight mechanisms, and safeguards against misuse, corruption, and mismanagement.
Did Somalia meet these conditions? The answer is NO, because:
Somalia did not meet the prescribed requirements to qualify the HIPC Completion Point, for the following reasons:
a) Lack of nationally agreed legislations:
- Somaliland, which is constitutionally part of Somalia, has not been and still not, in the state-building process, thus not recognize any legal instrument that Somalia’s Federal Government develops,
- Puntland has reiterated that it is neither obeying nor adopting to any national bills that Federal Government drafts as long as they are not in accordance with the Provisional Federal Constitution of Somalia
- Jubaland had lately revoked to implement the HIPC processes requirements
- Other FMS were not also invited for any consultation during the development of the pseudo bills.
b) Unresolved constitutional and federal frameworks:
As per the Provisional Federal Constitution, the FGS and FMS must politically agree the following fundamental instruments, then incorporate into the constitution before their application for other purposes like the debt relief. The following frameworks are also essentially fundamental for the state-building process:
- Fiscal federalism model of the Country
- Power sharing mechanism
- Resource sharing
- And the other national contentious issues that the constitution review process is pending to.
Henceforth, any sort of national instruments that the Federal Government develops without an inclusive consultation process with the state-building stakeholders, primarily the Federal Member States are null and void in the essence of the Provisional Constitution. Thus far, any such bill and frameworks could not be grounds for Somalia to qualify the debt relief in the first place.
Mohamed Abdirahman (Dhabancad)
Email: [email protected]
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Mohamed is the former Minister of finance & former Minister of Interior and Federal affairs of Puntland, Somalia.
