IMF Staff Reaches Staff-Level Agreement on a Staff-Monitored Program with Somalia, Marking Milestone in Normalizing Relations with IFIs
At the end of the visit, Mr. Zandamela issued the following statement:
“Since 2012, the Federal Government of Somalia has embarked on an ambitious process of rebuilding the state and the economic and social infrastructure. Although much progress has been made, the security situation remains difficult and institutions and governance capacities need to be rebuilt. Considerable development efforts are essential for the reconstruction of Somalia.
“Despite the difficult socioeconomic conditions, recent efforts by the Federal Government of Somalia (FGS) are bearing fruit. Economic growth in 2015 was estimated at 3.7 percent and inflation at 1 percent. However, in the fiscal area, insecurity and the war-induced destruction continue to hamper revenue collection and the delivery of services to the population.
“The FGS is committed to addressing the difficult challenges the country faces. It is embarking on policies and reforms to improve economic governance, strengthen the fiscal framework, and rebuild the financial system.
“To support the authorities’ reform effort, we have reached a staff-level agreement on a 12-month SMP starting in May 2016. This is a significant milestone for Somalia, marking the move toward normalizing relations with International Financial Institutions. The program will focus on policies to improve governance and fiscal management, strengthen institutions, foster financial sector development, and fill considerable data gaps. Technical assistance and capacity building will be an integral part of the program.
“In particular, the program envisages reforms to raise domestic revenue and improve budget preparation and execution. It emphasizes the implementation of a recently-adopted arrears management strategy, and the continuation of public financial management reforms to enhance the transparency of, and accountability for, government operations. To support financial sector development, the program will initiate a comprehensive currency reform, and strengthen licensing, supervision and regulation of commercial banks and money transfer businesses.
“The SMP will be submitted to IMF management for its consideration in April/May 2016. 1
“The IMF will continue to support institutional and capacity building through the IMF multi-donor trust fund. The success of the SMP will hinge on continued support of the international community.
“During the mission, the team met with Finance Minister Mohamed Adan Ibrahim; Central Bank Governor Bashir Issa Ali; Permanent Secretary of the Ministry of Planning and International Cooperation, Abdi Dirshe; and other officials. The mission also met representatives from development partners. The team would like to thank the Somali authorities for their cooperation and the open and productive discussions.”
1 An SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic program. SMPs do not entail financial assistance or endorsement by the IMF Executive Board.