Somalia’s protracted statelessness has resulted in the country defaulting on its external payment obligations, thereby accumulating external payment arrears.

As a result, Somalia is starved of new financing that is required to finance its development budget and relies only on grants to supplement limited domestic revenues; Clearing Somalia’s arrears and securing comprehensive debt relief are critical in regaining access to concessional financing from both multilateral and bilateral development agencies. As one of the world’s poorest and most indebted countries, Somalia would most likely meet the eligibility requirements of the Heavily Indebted Poor Country (HIPC) Debt Relief Initiative and the Multilateral Debt Relief Initiative (MDRI).