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International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Somalia’s Second Review Under the Staff-Monitored Program and Request for Three-Year Arrangements Under the Extended Credit and the Extended Fund Facility. The three-year financing package will support the implementation of the authorities’ National Development Plan and anchor reforms between the heavily indebted poor countries Decision and Completion Points. Reforms will focus on a continued strengthening of public finances to meet Somalia’s development needs in a sustainable manner; a deepening of central bank capacity; improvement of the business environment and governance; and enhancing statistics. Risks to the program and outlook remain elevated, although there is also upside potential. The immediate political risks concern the upcoming elections, while frequent climate shocks continue to contribute to agricultural loss and human displacement. On the upside, greater-than-expected impact from reforms under the program and additional development financing, together with the development of new industries, could lead to higher and more inclusive growth than the baseline.
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Somalia’s 2019 Article IV Consultation, Second Review Under the Staff-Monitored Program (SMP), and Request for New SMP. Program implementation of SMP III has been strong, with all but one structural benchmark and all indicative targets met. The authorities have requested a new 15-month SMP to cement reforms and support reaching the Heavily Indebted Poor Country decision point as soon as the necessary conditions are met. The new national development plan will outline the authorities’ priorities with respect to poverty reduction and inclusive growth. The consultation focused on policies to support higher and more inclusive growth, strengthen the medium-term fiscal framework, deepen the financial sector, increase economic resilience, and improve governance and the business environment. Discussions highlighted the need to implement a durable fiscal federal framework, establish a robust framework for effective natural resource management, and develop the medium-term fiscal framework. However, security and political risks, and climate shocks remain the main sources of risk.
International Monetary Fund. Middle East and Central Asia Dept.
This first review under the Staff-Monitored Program (SMP) of Somalia highlights that supported by a favorable rainy season, economic growth is recovering and inflation easing. However, unemployment is very high, and development and social needs are very large. Policy discussions centered on the 2018 supplementary budget, the 2019 budget, as well as the macroeconomic framework. Discussions also laid the groundwork for the second and final review under SMP III and on near-term policy priorities. All end-June and end-September 2018 indicative targets and all structural benchmarks (SBs) have been met. Of the 10 remaining SBs, due end-December 2018 and end-March 2019, preliminary information suggests that two have already been met, progress has been made towards achieving seven others, but completion of one SB is likely to be delayed. Considering satisfactory performance under the SMP and the authorities’ continued strong commitment to reform implementation, the IMF staff supports the completion of the first review under SMP III. Risks to the program and the outlook remain elevated; however, a continued commitment to reform and donors’ sustained support will help mitigate the risks.
International Monetary Fund. Middle East and Central Asia Dept.
This 2017 Article IV Consultation highlights that despite a severe drought and sporadic terrorist attacks, Somalia avoided a significant economic slowdown in 2017 with support from the national and international community. Economic activity in 2017 is expected to have slowed. The drought that hit the country since late 2016 has receded, but it took a considerable toll, particularly in the remote areas. GDP growth is projected to have remained subdued at 1.8 percent in 2017. Driven by higher food prices, year-over-year inflation increased to 5.2 percent at the end of December 2017. A small budget surplus was achieved by the end of September 2017, even though domestic revenue fell short of the program target.