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Somalia to qualify for pre-arrears clearance by July-PM

Storyline:Business, National News

We call all of our partners to join, take risks, have more faith in the Somali people and continue helping us rebuild this nation piece by piece, block by block

Prime Minister Hassan Khaire speaking during the EU Day celebrations in Mogadishu. Photo: Goobjoog News

By T. Roble

Somalia will be eligible for pre-arrears clearance by July this year, Prime Minister Hassan Khaire said Wednesday signaling a major step towards debt relief but the premier called for sustained international and local support to realise this benchmark.

Speaking during the EU Day celebrations in Mogadishu, Khaire said his government was committed to a reform agenda aimed at creating favourable environment for debt relief.

“It is our hope that with the support the international community is providing and the hard work and dedication of our people that we will be eligible for pre-arrears clearance funding by July 2018 in addition to the direct budget support recently announced by the European Union when I was in Brussels.

In a communique following last week’s High Level Security Conference on Somalia, the EU announced possible budget support for Somalia following positive assessments from international financial institutions on Somalia during the Spring Meetings last month in Washington.

“..In support of this process, the EU welcoming indications from key partners, confirmed its commitment to discuss with the Federal Government of Somalia a package of up to €100 million in direct budgetary support,” the communique read in part.


Pre-arrears clearance is a key step towards qualification for the HIPC Initiative Decision Point. The Heavily Indebted Poor Countries (HIPC) Initiative is a multi-year process through which countries have to meet stringent reform benchmarks to qualify for debt relief. To qualify for step one (Decision Point), countries must be eligible for grants and loans from the World Bank’s International Development Agency. This can only happen if they have cleared arrears with this agency.

Somalia is estimated to have over $5 billion in external debt. The country is eligible for the HIPC Initiative together with Eritrea and Sudan.

Our finance teams are currently negotiating the terms of a third Staff monitored programme with higher conditionality, the PM added. “As I have mentioned to you before, these painful reforms are a necessity for us to rebuild our institutions as we aims towards full re-engagement with International Financial Institutions.”

He called on the international community to once again take a leap of faith in supporting Somalia realise its reform agenda and subsequently normalize its relations with International Financial Institutions.

We call all of our partners to join, take risks, have more faith in the Somali people and continue helping us rebuild this nation piece by piece, block by block, the PM said.


Speaking during the same event, EU Special Representative for the Horn of Africa Alexander Rondos echoed the Prime Minister’s remarks noting the Somalia was on the path towards economic stability thanks to endorsement from International Financial Institutions.

Rondos said Somalia can greatly learn from the EU’s journey since the formation of its predecessor, the European Economic Community 1957 when countries chose to merge economic interests as an ingredient to further unity and prosperity and in effect resolving bitter disputes that had defined relations with countries such as France and Germany.

“The fact that your government a week or two ago, if you will, received  an endorsement from International Financial Institutions for the efforts made so far opened the path towards where economic rather than guns will settle disputes and in politics there are always disputes.”

The EU Delegation which has been based in Nairobi marked the EU Day in its Mogadishu embassy for the first time today following its relocation this year.