MOGADISHU, Somalia – Somalia’s government risks losing between $450 million and $600 million in annual external financing as international aid and direct budget support continue to decline, Finance Minister Bihi Iman Egeh said, underscoring the country’s heavy reliance on donor funding to sustain public spending, Arlaadi Media Network reports.
The warning comes as Somalia faces growing fiscal pressure amid political uncertainty and weakening external support. The country depends on grants from bilateral donors and multilateral lenders to finance government operations, security, health, education and development projects, despite efforts to increase domestic revenue following debt relief under the Heavily Indebted Poor Countries (HIPC) initiative.
Egeh said the expected funding shortfall could strain the government’s ability to meet budget commitments if alternative sources of financing are not secured. Speaking at an event in Mogadishu on Tuesday, he added that international aid and direct budget support have fallen steadily in recent years, forcing authorities to reassess spending priorities.
Western governments and international financial institutions have become increasingly cautious about disbursing funds amid Somalia’s prolonged political impasse, according to officials and analysts.
Several donors have, according to reports, linked future financial support to progress on governance, constitutional reforms and political dialogue, although no coordinated suspension of assistance has been formally announced.
Somalia has implemented a series of economic reforms since securing debt relief in late 2023, expanding domestic revenue collection and rebuilding relations with international financial institutions. However, external grants remain a critical source of financing, leaving the Horn of Africa nation vulnerable to shifts in donor priorities and political developments.
