For total outstanding somali debt which I think is main issue , we owe 4.4 billion end of 2022
PL Minister confirms PM Hamza Barre’s accusation that PL is blocking debt relief. Says the debt is Hargeisa and Mogadishu’s so will not work with FGS
- Thread starter bidenkulaha
- Start date
We are good, we secured 300million for the liberated areas. Debt relief would've been a cherry on top of the cake. We managed to take over everything between the Jubba and Galkacyo in 2006 with domestic funding from Ceel Macaan port. We will keep on striving for just that.
bidenkulaha
GalYare
In the meantime HSM should get GM to triple those border taxes. Opening up the South will increase Xamar revenue. The new taxes regime and the increase demand will probably push FGS revenue from Xamar beyond the expected $370mn.
Even in the scenario of debt relief, the conditions included the FGS having to become self sufficient (next to aid by 2027) and reducing wasted spending.
bidenkulaha
GalYare
In the case of not being able to repay, Somalia would ofc default. Not something IMF would want.
Somalia hasn’t really got anything to lose given our credit rating is in the junk and it would relieve us of the burden. But ofc the reason why debt relief is attractive is we get access to new loans
Exactly new loans and grants, and if we show government is able to manage books might even get direct investments from foreign nations and companies
bidenkulaha
GalYare
Basically HIPC is about building trust. Any investor would be secure in the knowledge their investments would eventually be paid back even in the event of government collapse because a future government would stick by the current government’s decisions.
At best it would be delayed. I highly doubt it would be at risk. Before May 15 election, IMF delayed the completion point to 2025. We’re only talking about 2023 because of the reforms this government has pushed through with speed. Likely the FGS and IMF will complete everything else and wait on what happens with PL
bidenkulaha
GalYare
Deni is against
• income tax law
• fiscal federalism
• new laws on revenue sharing (blue economy and resources)
• finishing the constitution without Somaliland
You can’t square this with what IMF is demanding which is effectively a centralised federal system with a constitution completed without SL (which creditors want given they will expect the FGS to pay back loans, not FMS)
IMF will have to accept the FGS and most of the FMS have agreed and ignore PL. SL was not included in the need for IMF debt relief so there’s precedent for this
Abaq
VIP
This must not be allowed. Puntland needs to push for a confederal system so reer Puntland don’t end up paying for Hutu debt (which they will loot anyway)This is irir debt used for Xamar and Hargeisa development, pay up. You want us to sign on so you could borrow more in all our names to loot/keep it your degaans?
Hopefully there should be middle ground, some options listed out in below documents
World Bank Debt Report
Policy options for agreeing a model for fiscal federalism
Last edited:
bidenkulaha
GalYare
I’ll be honest with you I don’t think PL would support a single option on that Fiscal Federalism. It aims to equalise the FMS revenue which would likely mean Xamar and now including PL subsiding other states in the short term
Diffuse looks likeliest. But that’ll not be favoured by the other states and FGS. Also it’s a terribly inefficient state as we’ll be left with border taxes and many different taxes levied by the states separately. Trade will be hampered
exactly the states with no ports and customs revenue will be burden, but its also largely symbolic since aid we will receive will likely dwarf what we give away
PL ministers in twitter space about the debt relief conflict said:
- HSM disbanded financial advisory committee, they were providing advice related to the debt relief, and then appointed inexperienced 30 year old who was part of HMS' campaign to become Auditor General. These actions cast doubts on the integrity and effectiveness of financial oversight within the country, and raised concern among international donors. This a point of contention between IMF and FGS, and HSM is the one jeopardizing debt relief with these kind of antics.
- FGS failed to adhere to previous agreements between FGS and FMS. After WB disbursed $100 million to the central bank, FGS refused to honor past agreements and took almost all of the money.
- FGS without our involvement or input submitted a list of projects intended for PL to WB. these PL projects represented less than 5% of total WB funded projects, which is unfair and unacceptable.
-When we saw how they're behaving like that, we stopped our cooperation with them, and although we're not necessarily against debt relief but we're totally against taking new debts after we saw how they managed the WB funded projects and the $100 million.
- HSM disbanded financial advisory committee, they were providing advice related to the debt relief, and then appointed inexperienced 30 year old who was part of HMS' campaign to become Auditor General. These actions cast doubts on the integrity and effectiveness of financial oversight within the country, and raised concern among international donors. This a point of contention between IMF and FGS, and HSM is the one jeopardizing debt relief with these kind of antics.
- FGS failed to adhere to previous agreements between FGS and FMS. After WB disbursed $100 million to the central bank, FGS refused to honor past agreements and took almost all of the money.
- FGS without our involvement or input submitted a list of projects intended for PL to WB. these PL projects represented less than 5% of total WB funded projects, which is unfair and unacceptable.
-When we saw how they're behaving like that, we stopped our cooperation with them, and although we're not necessarily against debt relief but we're totally against taking new debts after we saw how they managed the WB funded projects and the $100 million.
Im guessing the red which means external borrowing after 2024 is IDA 0% loans but not sure
20. Somalia is heavily reliant on external grants, which are expected to decline significantly after the HIPC CP. External grants finance roughly half of the budget, with the World Bank providing around 82 percent of total grants in 2022. However, while debt relief at the HIPC CP will facilitate Somalia’s access to new sources of financing, it will also entail a change in IDA financing terms as applicable to countries at a moderate risk of debt distress, from all grants to only concessional lending.
20. Somalia is heavily reliant on external grants, which are expected to decline significantly after the HIPC CP. External grants finance roughly half of the budget, with the World Bank providing around 82 percent of total grants in 2022. However, while debt relief at the HIPC CP will facilitate Somalia’s access to new sources of financing, it will also entail a change in IDA financing terms as applicable to countries at a moderate risk of debt distress, from all grants to only concessional lending.
