An International Monetary Fund (IMF) mission led by Mohamad Elhage visited Nairobi from September 21–27 for a staff visit to discuss with the Somali authorities’ recent developments, progress under the Staff-Monitored Program (SMP), and Somalia’s economic outlook.
At the end of the visit, Mr. Elhage issued the following statement:
“Since 2012, Somalia has been recovering from more than 22 years of civil war. Weak institutional capacity, complex clan politics, and a challenging security situation have complicated economic reconstruction. As a result, social and economic conditions remain dire. The Federal Government of Somalia (FGS) has initiated important reforms to lay the foundation for the country’s economic reconstruction.
“At the request of the FGS, the Managing Director of the IMF approved a 12-month SMP on May 16 (See Press Release No. 16/248). The SMP is geared toward strengthening macroeconomic policy management; reforms to improve governance and institutional capacity; and currency reform. Given Somalia’s weak administrative capacity, technical assistance, which is supported by a multi-donor trust fund that was established in February 2015, is an integral part of the program.
“Economic developments have been steady. Real GDP growth is projected to stay at 3.7 percent in 2016, driven by the telecommunication, construction, and service sectors. Despite an increase in prices on certain services, particularly, restaurants, hotels, and transport consumer price inflation is expected to remain low around 1.0 percent, reflecting mainly the sharp decline in oil prices and weak commodity prices. Continued increase in food imports and construction material will maintain a double-digit current account deficit (15.8 percent of GDP), which will be financed by remittances, foreign direct investment, and grants. Meanwhile, the SOS/U.S. exchange rate has stabilized within the range of about 22,200 and 23,000 since February 2015.
“The mission commended the authorities for progress made on capacity development and for completing important structural reforms since the approval of the SMP. The government has approved a public financial management (PFM) law, initiated electronic payments of civil service and police wages, submitted the 2015 financial statements to the auditor general, approved the 2016–20 PFM reform action plan, and adopted a draft National Development Plan (NDP). The Central Bank of Somalia (CBS) has created a Currency Department, reconstituted a fully staffed Cash Department, and completed an external audit of the CBS’s 2014 financial statement. The mission encouraged the authorities to keep up the reform implementation momentum in the face of significant challenges ahead. The IMF stands ready to provide additional support if needed to further safeguard CBS foreign currency reserves, including sharing international experience and technical assistance.
“The effort to restore key economic and financial institutions is ongoing. From June 2013 to July 2016, the IMF delivered about 60 technical assistance missions, including training in its area of expertise. Somalia is among the largest beneficiaries of IMF technical assistance. With donors’ support, the IMF will continue to intensify its capacity development activities.
“During the mission, the team met with Finance Minister Mohamed Adan Ibrahim; Central Bank Governor Bashir Issa Ali; and other officials including staff from the ministry of planning and international cooperation. The mission also met representatives from development partners. The mission would like to thank the Somali authorities for their cooperation and the open and productive discussions.”
Distributed by APO on behalf of International Monetary Fund (IMF).