Somalia owes around $4bn, most of it interest and penalties on nearly three-decades-old loans made to the former military government of Mohamed Siad Barre, whose overthrow in 1991 plunged the country in the Horn of Africa into years of lawlessness and civil war.

Those arrears make it almost impossible for Mogadishu to access new funds from the International Monetary Fund or the International Development Association, the soft loan arm of the World Bank that has money earmarked specifically for fragile states like Somalia.

Officials working with the new Somali government, which took office in February last year, describe the administration as the best in decades and complain that lending restrictions are hampering its efforts to fight al Shabaab, a militant Islamist group, and to build a functioning state.

Last year, the Somali government headed off famine in parts of the country with international help. Al Shabaab has been pushed back, but is still able to carry out deadly terrorist attacks, such as bomb blasts in Mogadishu in October in which more than 350 people were killed.

In an interview with the Financial Times, Hassan Ali Khayre, the prime minister, said of efforts to establish a functioning administration: “Now we have turned a page and taken bold steps, we are hoping the world will take a little more risk on Somalia.”

Mr Khayre, a former aid worker and oil executive, said the government had a budget of only $274m, which was not enough to create the social programmes needed to prevent radicalisation of unemployed youth or to address deprivation. He could not confirm an estimate, made by one World Bank official, that al Shabaab had a bigger budget than the government.

“Certainly, ours is a very tiny budget for a country of 10m people,” he said. “Fighting terrorism needs good governance. It means providing services for our people. To do this costs money and that’s why we need the support of the international community.”

Only the Somalis are going to defeat al Shabaab. And if they are going to do it they are going to have to be able to pay for it.
Michael Keating, Special Representative of the UN Secretary-General for Somalia

Kevin Watkins, chief executive of UK-based charity Save the Children, said it was urgent that the IMF accelerate a process to forgive Somalia’s debt under the Heavily Indebted Poor Countries initiative that has seen debt write-offs in more than 30 countries, mainly in Africa.

Mr Watkins, who has exchanged letters on the subject with Christine Lagarde, IMF managing director, described what he said was IMF foot-dragging as “inept, misplaced and embarrassingly complacent”.

Mohamed Elhage, who leads the IMF’s Somalia mission, said the country was “marking important milestones on reform and policy implementation”, although it needed to make stronger efforts to improve fiscal discipline and raise tax revenue.

The head of the Atlantic Council’s Africa Center in Washington, Peter Pham, said multilateral institutions were right to be cautious before flooding Somalia with money. “It’s déjà vu when the dilettantes in the international community get excited about the Somali government,” he said. “Let’s not flood the country beyond its capabilities to absorb.”

Mr Pham accepted that the new government had made progress but said he was not convinced that corruption had been brought under control. “Huge amounts of aid in cash simply disappears,” he said, adding that he suspected up to half of the 27,000 soldiers being paid to fight al Shabaab with western help were “ghost soldiers”, drawing a salary without doing any fighting.

Of the government’s limited budget, he said: “I’ve yet to figure out what they do with that $250m other than to travel to conferences and to pay parliamentarians whose absentee rate is atrocious.”

Michael Keating, the Special Representative of the UN Secretary-General for Somalia, said he thought the new government was worthy of support. “I’m a bit of a cheerleader for Somalia. This government is on a steep political learning curve but has serious agenda,” he said.

“Only the Somalis are going to defeat al Shabaab. And if they are going to do it they are going to have to be able to pay for it,” he added. “That’s the reason why getting to arrears clearance and HIPC debt relief is so important.”

The country’s Prime Minister has fired three ministers in a major cabinet reshuffle in East African nation. Ministers for Foreign Affairs, Interior, Reconciliation and Federal Affairs as well as commerce lost their portfolios as the government hopes to improve delivery.

Somalia’s prime minister, Hassan ali-Khaire, said his government had demanded the U.S. briefly suspend aid to much of Somalia’s armed forces in an effort to improve transparency and accountability following corruption concerns.

Speaking Saturday to reporters in Mogadishu, Khaire blamed former Somali governments for U.S. concerns about corruption.

“In the first month in office, my government stood for the need for Somalia to be governed on transparency principles,” he said. “To ensure such principles, Somalia and the U.S. government have agreed to this aid suspension.”

He said that the pause in assistance was part of his government’s effort to fight corruption by tackling misconduct and opening the door to accountability.

“We have done a study that made it possible to find out the challenges against rebuilding our national army, including diversion of soldiers’ salaries, lying about the list of the active and alive military personnel, and as a result, we have jointly decided to suspend the U.S. aid to parts of Somalia’s military for a few weeks until we improve and fix the errors,” Khaire said.

Mattis ‘sure’ of progress

On Friday, U.S. Secretary of Defense Jim Mattis said that he was optimistic about improving Somali accountability concerning the distribution of American aid to Somali armed forces.

“I’m sure we can get this thing under control, even if it’s not for the whole, but for parts of it,” Mattis told reporters at the Pentagon.

Despite the aid suspension, Khaire said his government was confident that it had gained the trust of both Somali people and its international partners.

“In the light of the recent IMF [International Monetary Fund] and World Bank reports on Somalia and the work we have so far done, we are confident that we have gained the trust of the Somali people and our international friends,” he said.

For nearly two decades, Somalia has been among the world’s most corrupt countries, topping the list made by the corruption monitoring group Transparency International.

Nepotism, favoritism, bribery and aid embezzlement have been commonplace across all sectors, making many citizens believe that corruption is a normal way of life.