Somalia Optimistic to end war with Al-Shabab, receive debt relief by 2023

Somalia is confident that its two biggest nightmares will end next year.

Prime Minister Hamza Abdi Barre said that winning the war against al-Shabaab and Somalia’s efforts in receiving debt relief will be realized by 2023.

Speaking on Monday, Prime Minister Hamza Abdi Barre said Mogadishu is optimistic that the future was bright as the government has put all its efforts in dealing with two challenges. 

His administration has been commended for sticking to economic reforms despite a prolonged drought, the impact of Russia’s war in Ukraine and continued security concerns.

“Our hope is that in the coming year we will have dealt with the two biggest problems of our time, Al-Shabab and the debt our country has, which we are working on to be relieved altogether” said Prime Minister Hamza Barre. 

The World Bank has approved a $100 million grant to support the continuation of Somalia’s reform efforts in reaching the Completion Point of the Heavily Indebted Poor Countries (HIPC) Initiative, when Somalia will be eligible for full and irrevocable debt relief. 

The operation supports the government’s efforts to improve fiscal transparency and increase revenues through the harmonization of customs regimes across the federation and improving the governance of intergovernmental fiscal transfers. 

It would also open up new sources of financing for Somalia, a big help as the country works to implement development programs and promote growth and employment. 

One pillar of the country’s economic reforms would be to improve domestic revenue, including through enhancing collection of sales taxes.

Debt Relief will help create the building blocks for strengthening intergovernmental fiscal cooperation to enhance the ongoing state stabilization agenda critical for stimulating inclusive economic growth by fostering trust and enhancing financial transparency between the federal government and member states.

The IMF said Somalia still needed continued and immediate support from international partners given the current severe food crisis, but also needed to work on building longer-term resilience to climate shocks.

Somalia’s outlook remained clouded, with GDP growth for 2022 projected at 1.9%, down from 2.9% in 2021, and inflation projected to reach 9% from 4.6% in 2021, the IMF said.

Near-term risks were elevated, including a worsening of the food crisis that already has 4.3 million people facing acute food insecurity, if healthy rains do not resume in 2022 or if commodity prices rise further.