IMF says Somalia on good track of policy reform

Imprimer

Nairobi, Kenya, September 23 ( Infosplusgabon) - Despite a difficult economic and political environment, the authorities in Somalia are building a good track record of policy and reform implementation, according to an International Monetary Fund (IMF) staff team that met with senior Somali government officials as well as representatives of bilateral and multilateral donors in Nairobi, Kenya, this week.

 

“Despite recent efforts to further solidify economic stability, security and peace, challenges are significant. Somalia’s fragility is compounded by its vulnerability to natural disasters,” remarked Mr. Mohamad H. Elhage, who led the IMF team at discussions with the Somali officials on recent macroeconomic developments and the country’s economic outlook. The discussions were held in the Kenyan capital, Nairobi.

 

In a press release made available  on Sunday,Mr. Elhage noted that the Federal Government of Somalia has successfully completed two consecutive 12-month Staff-Monitored Programmes (SMPs) since May 2016, and on 20 June 2018, the Managing Director of the IMF approved a third 12-month SMP (SMP III) covering May 2018–April 2019.

 

According to the IMF official, the third SMP will continue to lay the foundation so that Somalia obtains debt relief under the Heavily Indebted Poor Country (HIPC) Initiative as soon as feasible once established benchmarks are met.

 

“Despite recent efforts to further solidify economic stability, security and peace, challenges are significant. Somalia’s fragility is compounded by its vulnerability to natural disasters,” Mr. Elhage said. “The 2016–17 drought, which was followed by floods in some regions in 2018, has led to large humanitarian needs.”

 

Due mostly to an increase in internally displaced persons, demand for humanitarian assistance remained elevated in 2018. To address the weak security situation, the Federal Government has, jointly with the international community, renewed its focus on building the capability of Somalia’s security forces and institutions as the country prepares for elections in 2020-21.

 

The IMF team observed that economic activity is recovering slowly from the 2016–17 drought aided by favourable rains and continued strong remittance inflows. For 2018, growth is projected to recover to 3.1 percent from 2.3 percent and inflation to ease to 3.5 percent, down from 5.3 percent in 2017.

 

The team has commended the authorities’ strong resolve to complete the preparatory steps for launching the new national currency, which remains a high priority in their reform agenda. They intend to swiftly establish a currency reform project management plan and administration along with an accountability framework.

 

“Given the uncertainties about grant disbursements,” the statement said, “expenditure will need to be contained. In this regard, the IMF team recommends the following measures for the remainder of 2018 to keep the fiscal framework on track:

 

•          Continue to improve revenue collections from recent tax measures, including: (1) sales tax on imports of goods; (2) corporate profit tax; (3) sales taxes and license fees from telecommunication companies; and (4) continue transferring revenue collection from ministries, departments, and agencies to the Ministry of Finance, including visa charges, and passport and labor registration fees.

 

•          Strengthen revenue collection by the Large-and-Medium-Taxpayers' Office, which has been fully operationalized since June.

 

 

•          Ensure that grant projections are consistent with confirmed pledged grants.

 

 

 

FIN/INFOSPLUSGABON/OIS/GABON 2018

 

 

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