Post-debt relief governance and debt sustainability in Somalia: A systematic review and debt sustainability analysis

Type of the article: Research ArticleAbstractThis study examines Somalia’s post-debt relief governance and debt sustainability to identify the institutional and fiscal reforms needed to preserve debt sustainability in fragile states. This study adopts a mixed-methods approach that combines a qualitative systematic literature review with a debt sustainability analysis by using the IMF-World Bank Low Income Country Debt Sustainability Framework (LIC DSF). Somalia’s debt position improved markedly after HIPC relief: external debt declined from 64 % of GDP in 2018 to 6.4 % in 2023 and is projected to remain below 6 % of GDP during 2024-2028. In the baseline scenario, the present value of external debt averages about 5 % of GDP, well below the 30 percent threshold for countries with weak debt-carrying capacity. Debt service indicators also remain low, with debt service-to-exports below 1.2 % and debt service-to-revenue below 4.5 % through 2028. Standardized stress tests, by contrast, push debt service above its indicative ceilings, which supports a moderate rather than a low-risk rating. Yet many peer countries in Sub-Saharan Africa still face precarious debt positions, with numerous low-income nations at high risk or already in debt distress. Sustaining this outlook will depend on continued governance reforms, fiscal discipline, and transparent borrowing that strengthen institutional capacity and resilience to future shocks.