Arab League cancels 75 percent of Somalia’s arrears, a boost for Mogadishu’s hard-won comeback
The Arab League has agreed to cancel 75 percent of Somalia’s unpaid membership dues, a rare step that trims nearly four decades of arrears and signals renewed political backing for a country still rebuilding from conflict and climate shocks. The decision was taken in Cairo during the League’s 164th session of permanent representatives, Somali officials said Tuesday.
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Somalia’s Ambassador to Egypt and Permanent Representative to the Arab League, Ali Abdi Aware, called the move a “historic achievement,” thanking member states for what he described as the culmination of sustained, behind-the-scenes diplomacy by Mogadishu’s team in Cairo.
What happened
The partial waiver covers unpaid annual contributions Somalia owed to the Arab League since the civil war unraveled the central state in the early 1990s. Officials did not disclose the precise amount written off. Somalia joined the pan-Arab body in 1974; successive governments in the decades since the state’s collapse struggled to meet basic obligations at home, let alone regional membership fees.
While the sums involved are small compared with sovereign debt, they carry outsized political weight. Clearing arrears helps restore voting clout, credibility and access inside regional halls where budgets, resolutions and peace initiatives are negotiated—venues where Somalia has often been present but under-resourced.
Why it matters
Debt relief is as much about psychology and politics as it is about balance sheets. For Somalia, a country of 17 million navigating insurgency, climate extremes and a years-long effort to rebuild institutions, the Arab League’s step is a nod of confidence from neighbors and partners who watched its near-collapse three decades ago.
It also aligns with a broader reset in Somalia’s financial standing. In 2024, the Paris Club of major creditor nations announced the cancellation of 99 percent of Somalia’s roughly $2 billion in eligible bilateral debt—partly through voluntary deals and partly under the IMF–World Bank Heavily Indebted Poor Countries (HIPC) Initiative. That followed Somalia reaching the so-called “Completion Point” in the HIPC process, a milestone that took years of fiscal reforms and external auditing to achieve.
In practical terms, every waiver frees government bandwidth. Instead of servicing arrears, Somalia can focus resources on stabilizing newly liberated districts from al-Shabab, paying teachers and health workers on time, digitizing tax collection, and hardening infrastructure against floods and droughts that have whipsawed the country in recent seasons. The government is also trying to modernize the Somali shilling and formalize parts of the economy still dominated by remittance networks, which bring in an estimated $1–2 billion from the diaspora each year.
The bigger debt picture
Somalia’s trajectory is part of a larger global story. Low-income countries have faced the steepest debt-service burdens in a generation, squeezed by pandemic fallout, higher interest rates and climate costs. The World Bank has warned that debt service for the poorest countries has surged in recent years, with many spending more on creditors than on health or education.
Against that backdrop, Somalia stands out as a case where patient reform did unlock relief. Its HIPC journey required cleaning up public accounts, enacting procurement rules, and strengthening the central bank—technical steps that rarely grab headlines but matter in the long run. The Paris Club’s near-total write-off and the Arab League’s three-quarters waiver together confirm that creditors see progress and are willing to reward it. The remaining question is whether these gains translate into sustained growth and better services for ordinary Somalis.
A long road back
Debt relief does not erase the constraints. The security environment remains volatile, with the national army and allied local forces pushing into militant strongholds and then struggling to hold territory. Climate shocks are cyclical and severe: droughts have scorched crops, followed by floods that wash away roads and markets. In many rural districts, a young person is more likely to encounter a mobile money agent than a paved road or a functioning public clinic.
Still, there are signs of momentum. Mogadishu’s financial authorities are piloting a new national payment system. Customs collection is up in key ports. Private telecoms and banks—long the backbone of a country without a formal postwar bailout—continue to knit together a continental hub for digital payments that stretches from the Somali coast into the Gulf and the Horn. The Arab League’s gesture chimes with this trend: it recognizes the grind of reform as much as the headline announcements.
Regional diplomacy, once again in play
Arrears in regional bodies carry reputational costs—missed meetings, diminished voting sway, and the quiet sidelining that comes with unpaid bills. By reducing Somalia’s backlog, the Arab League is effectively pulling Mogadishu closer to its Arab partners at a time when the Horn of Africa is entangled in wider Red Sea tensions and shifting alignments. Whether on trade corridors, migration, or security coordination, the League’s members are stakeholders in Somalia’s stability.
There is also a generational dimension. Many Somalis under 35, born after state collapse, have never known their country to be fiscally current with international bodies. Regularizing those relationships sends a signal to young entrepreneurs and officials that the painstaking work of normalization is not theoretical—it shows up in real decisions, like Tuesday’s vote.
What to watch next
- Transparency on numbers: Somali authorities say the decision covers 75 percent of arrears; clarity on the total outstanding amount and the timeline for the remaining 25 percent will matter for credibility.
- Follow-through on reforms: Debt relief creates breathing room. The test is how quickly that space is used to reinforce revenue administration, public payroll integrity, and priority spending.
- Regional coordination: With arrears easing, Mogadishu will seek to be more active inside Arab League committees on economics, health, and education—areas where technical cooperation could yield quick wins.
- Private investment signals: Creditors’ confidence can crowd in private capital, particularly for ports, logistics, and energy. But security and rule-of-law improvements remain preconditions.
For now, the mood in Mogadishu is one of cautious satisfaction. After years of painstaking ledger work, Somalia is slowly stepping back into the rooms where its future is negotiated. The Arab League’s vote does not solve the country’s challenges, but it trims a long bill and opens a few more doors. In a region where small gestures often foreshadow larger shifts, that is no small thing.
By Ali Musa
Axadle Times international–Monitoring.
