Thread by @Barkinka1

Finally found time to follow-up the important points raised by our brother @Abukar_Arman

There’re several considerations which, in no particular order, include following;

-so-called arrears of the 3 multilaterals transitioned thus far represent only a 5th of total debt

*THREAD

-important to remember HIPC doesn’t ever achieves full debt relief as non-Paris Club participation now stands at 51%

-even the total amounts committed by Paris Club creditors for debt relief from its inception stands at $21.8b (shared across qualifying 36 countries)!

-in comparison non-Paris Club creditors' net equivalent is estimated at $4.9b (across qualifying 36 countries)

-the former averages $605m & the latter $136m, per country in HIPC’s existence

-whereas full debt relief for qualifying 36 countries would’ve costed creditors $119.5b!

-HIPC promoters, when touting benefits of debt relief, always assume full debt relief in their models of highly unrealistic economic growth predictions

-moreover, debt servicing cost as percentage of GDP in those 36 countries is back to (or thereabout) pre-HIPC decision point!!!

-assuming at HIPC conditionalities are met, still a big if, and based on realized commitments as proportionally extrapolated averages from observations in the 36 countries that completed the programme, Somalia would still be left with ~$3b (64% of current total outstanding debt)!

-this is why some governments declined to avail themselves of HIPC Initiative assistance at various points in time over the last two decades — Bhutan, Kyrgyzstan & especially Nepal come to mind

-so is HIPC completely useless? Not always. It may be useless to some countries, though initially beneficial to most other countries. But that’s not the issue here. Within the context of Somalia, HIPC is not just useless, it’s dangerously harmful!

-one of the most immediate benefits would’ve been resource reallocation; if debt servicing cost significantly decline for example, the idea is that poverty reduction expenditure would increase by that same amount (indicates it's HIPC administrating institutions' favourite metric)

-but if Somalia isn’t buckling under huge debt servicing payments which are disproportionately eating into its budget, then there’s nothing much to reallocate. Unless sustainability questions are out of order of course 🤔

-as for implied additional grants (although new debt almost always replaces old debt in this rat wheel cycle), these multilaterals are already engaged with #Somalia and giving grants (not as if the country is suddenly going to rehabilitate from hiatus status post-HIPC completion)

-debt restructuring mechanisms could translate that Somalia must meet its debt servicing obligations

-can this government be confident that, in the long term, marginal increase in grants would significantly exceed budget allocated for debt servicing? If so, where’s the evidence?

-it’s clear that the intention is to apply for new loans, and here’s where we insist in our opposition most vehemently. There’re many, many crucially important reasons why we have to oppose this, but let me give a couple of generic examples 1st in ways each person can understand;

1)obviously we oppose any interest-bearing borrowing

2)even if Somalia can borrow on concessional terms at zero interest rates, the country is big and includes Somaliland. How do you determine creditworthiness; priorities borrowing demands; share investment and liabilities; etc?

3)the country lacks sovereign money, and from the perspective of sovereign currency, Somalia doesn’t even classify as such. This is a guaranteed way of wasting resources, burning through grants and digging even a bigger 🕳️ of indebtedness

4)corruption, corruption, corruption🤑

-obviously the above list is far from exhaustive, but it's enough to indicate all obstacles/potential pitfalls which Somali government and its cabalistic international handlers are failing to account for

P.S. 🙈🙉🙊 cadres must not bother with sniping one-liners — no time!

*END