Professor Mohamed S. Samantar: Debt Relief Could propel Somalia into a New Era of Prosperity

[Deeq A.]

Professor Mohamed Said Samantar teaches economics at the Puntland State University. Before the collapse of the state in Somalia in 1991 he taught economics at the Department of Economics of the Somali National University in addition to being a mathematician who was a member of the committee tasked with writing mathematics books in Somali language for schools. He holds DPhil in economics from the University of Sussex. He has written and co-written research papers published in peer reviewed journals. Puntland Post Monthly interviewed him by email.

Professor Mohamed Said Samantar

Puntland Post Monthly: Somalia is seeking debt relief. Given the current political situation in Somalia, is debtrelief an agenda worthy of the Federal Government of Somalia’s attention?

Professor M.S. Samantar: Yes, it is worth seeking debt relief. Total debt service refers to all costs related to servicing a country’s debt. This often includes interest payments, principal payments, and other obligations. Somalia’s government lacks the ability to collect domestic revenue. External debt – mostly in arrears – was estimated at about 77% of GDP in 2017.

Puntland Post Monthly: If successful what impact will debt relief have on the economy of Somalia?

Professor M.S. Samantar: If successful it could propel the country into a new era of prosperity. “Debt relief is also more or less a prerequisite for Foreign Direct Investment (FDI).” Somalia may bank on its oil stock.

Puntland Post Monthly: How likely is that, in the absence of debt to service, the Federal Government of Somalia may borrow money from multilateral organisations?

Professor M.S. Samantar: It is highly unlikely to receive Multilateral Money from public or private financial institutions to foster development projects. Cancelling the debt would give Somalia access to long-term development finance, create the conditions for private investment, and open the door to a vital stream of humanitarian funding.

Puntland Post Monthly: In 1987 you had your paper on debt servicing published in nowdefunct Industrial Management Review. Roughly what percentage of the debt Somalia was servicing then had been borrowed before and after the military coup of 1969?

Professor M.S. Samantar: Somalia’s external debt is about 5.3 billion U.S. dollars, but the Federal Government has not made a service or amortization payment since the onset of the civil war two decades ago, making it impossible to access loans from the IMF.

Puntland Post Monthly: The Somali Federal Government has developed a National Development Plan although Somaliland Administration has its own Development Plan through which it accesses development assistance. The former military regime abandoned centrally planned economy in 1986, when it had signed up to Structural Adjustment Program under IMF. What are pitfalls into which planners can fall in a country recovering from state collapse?

Professor M.S. Samantar: The Somali Federal Government has developed a three-year Development Plan 2017-2019 and preparing a five-year Development plan 2020-2024 for Somalia as a whole. These are not different from the 1986 development plan of a central unitary government. Somaliland and Puntland have developed their own Development Plans. However, no harmonisation has ever taken place among the different plans.

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© Puntland Post Monthly, 2019

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