PREVIEW
Hailing successes on security and promising direct elections next year, the President seeks a debt deal
President Hassan Sheikh Mohamud's government is edging towards an agreement with the international financial institutions that could slash its external debt by 90% after a completion of a review by the IMF's Executive Board.
An IMF team completed discussions with the Somali authorities in Nairobi in March and reached a staff-level agreement on the fifth review under the existing Extended Credit Facility (ECF) arrangement. A further $9.4 million will be disbursed under the ECF as a result. It is the first since Hassan Sheikh took office a year ago (AC Vol 63 No 11, Kenya and US welcome Hassan Sheikh's presidential comeback).
The Fund reckons that Somalia could reach the Highly Indebted Poor Country (HIPC) Completion Point, at which stage it would be eligible for full debt relief under the IMF/World Bank programme later this year. That could lead to the paring down of its debt to around US $550m from $5.2 billion.
The Somali authorities have also reached debt relief agreements with most Paris Club members and the Kuwait Fund for Arab Economic Development (KFAED).
It is conditional on Somalia's financial institutions and the government moving faster on implementing laws to tackle illicit financial flows, tax transparency and increased revenue collection.
Further progress might be compromised by the bitter political dispute between the federal government and the semi-autonomous state of Puntland (AC Vol 64 No 1, Trouble ahead for Hassan Sheikh's united front). Last week, Somali Prime Minister Hamza Abdi Barre accused Puntland of jeopardizing the debt relief programme by refusing to participate in national meetings on the issue.
On 28 May, Hassan Sheikh announced the country would start preparing direct universal suffrage elections next year. This follows widespread criticism of last year's indirect vote through selected members of the national assembly.
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