IMF Management Complete the First Review Under the Staff-Monitored Program with Somalia
November 18, 2019
- IMF staff commends the authorities for implementing key reforms and for satisfactory performance under the fourth Staff-Monitored Program (SMP).
- Maintaining strong performance and support from international partners will pave the way for Somalia to receive debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.
- The IMF supports Somalia’s efforts to secure debt relief and is working with its members to secure the financial resources necessary to cover the IMF’s costs of debt relief.
On September 23, 2019, the Management of the IMF completed the first review under the fourth Staff-Monitored Program [1] (SMP IV) with Somalia, which covers the period May 2019–July 2020. Reforms in SMP IV focus on further efforts to mobilize revenues, including across the Federal Member States, strengthen public financial management, enhance financial sector stability, and strengthen compliance with the framework for anti-money laundering/ combatting the financing of terrorism.
The authorities’ strong commitment and program implementation has strengthened capacity despite a challenging environment. Sustaining the stated commitment of the Finance Ministers of all the Federal Member States (FMS) to the goals of the program will be critical to mitigating program implementation risks.
Underlying economic growth remains stable, supported by donor support and the ambitious and broad reform agenda. However, insecurity and recurring drought represent key risks to the outlook, and, despite progress, growth is insufficient to substantially reduce poverty.
The fiscal policy framework continues to strengthen, with domestic revenue mobilization reaching $126 million in the year to July 2019 exceeding the indicative target of $111 committed to in the program. Continued progress on public financial management, including to strengthen expenditure controls and pass the updated Public Financial Management Law, will be key to continuing to improve governance and donor confidence.
Financial stability reforms are deepening. New mobile money regulations are welcome, and implementation will be key for supporting financial stability. Continued efforts to expand the operational and organizational capacity of the Central Bank of Somalia will underpin further development of the financial sector more broadly.
Reducing Somalia’s debt to sustainable levels under the Heavily Indebted Poor Countries (HIPC) Initiative and normalizing relations with international financial institutions will unlock access to additional financial resources to address Somalia’s development needs. Achieving this goal in a timely manner will require a concerted effort on the part of both the authorities and the international community. To reach the HIPC Decision Point, the authorities are developing the necessary track-record in the context of the SMP IV, and work on the authorities’ ninth National Development Plan, which will form Somalia’s interim poverty reduction strategy, is complete. Securing sufficient financing commitments for arrears clearance and debt relief is also required. The IMF fully supports this goal and is working with its membership to secure the necessary financial resources to cover the IMF’s costs of debt relief.
[1] An SMP is an agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic program. SMPs do not entail endorsement by the IMF Executive Board. The SMP is supported by quantitative performance measures, indicative targets and structural measures.
IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: Wafa Amr
Phone: +1 202 623-7100Email: MEDIA@IMF.org