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Somalia: Staff Report for the 2015 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. Middle East and Central Asia Dept.
Published Date:
July 2015
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IMF Relations

(As of May 31, 2015)

Membership Status: Joined: August 31, 1962; Article XIV

General Resources Account:

SDR Million% Quota
Quota44.20100.00
IMF holdings of currency (exchange rate)140.45317.77
Reserve Tranche Position0.000.00

SDR Department:

SDR Million% Allocation
Net cumulative allocation146.46100.00
Holdings18.3039.39

Outstanding Purchases and Loans:

SDR Million%Quota
Stand-by Arrangements67.72153.22
Trust Fund6.4614.62
SAF Loans8.8420.00
Contingency and Compensatory28.5364.54

Latest Financial Arrangements:

TypeDate of ArrangementExpiration DateAmount Approved (SDR Million)Amount Drawn (SDR Million)
SAFJun 29, 1987Jun 28, 199030.948.84
Stand-ByJun 29, 1987Jun 28, 198833.155.53
Stand-ByFeb 22, 1985Sep 30, 198620.1020.10

Projected Payments to the IMF (SDR Million):2

OverdueForthcoming
May 31, 201520152016201720182019
Principal111.55
Charges/Interest124.390.591.101.101.101.10
Total235.940.591.101.101.101.10

Implementation of HIPC Initiative: Not yet reached decision point.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable.

Implementation of Catastrophe Containment and Relief (CCR): Not Applicable.

Exchange Rate Arrangement

The currency of Somalia is the Somali shilling (SOS). However, the de facto currency is the U.S. dollar. Dollar banknotes are used as cash currency with Somali banknotes serving as a sub-denomination. Neighboring country currencies are used in border areas. Mobile phone payments, with transactions denominated in U.S. dollars, are widely used. Most transactions are settled in U.S. dollars. The SOS exchange rate has remained broadly stable in recent years at USD1 = SOS 20,000. During May 2015, the rate depreciated briefly to SOS 23,500 in response to an influx of new, counterfeit notes. The de jure exchange rate arrangement is undetermined. Due to the absence of administrative measures controlling the level of the exchange rate, and the inoperative status of the CBS in the foreign exchange market, the de facto exchange rate arrangement is classified as a free floating arrangement.

As part of its ongoing reengagement with the authorities, staff continues to assess the jurisdictional implications of the existing exchange regime. Somalia still avails itself of the transitional arrangements of Article XIV, however it no longer maintains restrictions under Article XIV. At the time of Somalia’s last Article IV consultation in 1989, Somalia maintained the following Article VIII restrictions: (i) a multiple currency practice and exchange restricting arising from the imposition of a ten percent levy on all applications for purchases of foreign exchange under the commodity import program, (ii) a multiple currency practice arising from different exchange rates applicable to official transactions and to transactions in external accounts and to import/export accounts, and (iii) an exchange restriction evidenced by some external payments arrears. As part of its ongoing reengagement with the authorities, staff continues to assess the existing exchange regime.

Article IV Consultation

Although Somalia is on the standard 12-month Article IV consultation cycle, civil war led to the postponement of discussions for 26 years. The last Article IV consultation discussions were conducted on July 9-23, 1989 in Mogadishu. The Executive Board concluded the 1989 Article IV consultation on November 13, 1989.

Technical Assistance (TA) 2013–15

TopicDate
Fiscal Affairs Department
Budget diagnostics (w/ MCD staff visit)10/22/2013
Budget preparation and execution (w/MCD staff visit)2/17/2014
Budget preparation and execution (w/MCD staff visit)4/28/2014
Budget preparation and execution (w/MCD staff visit)9/9/2014
Public financial management1/26/2015
General tax policy3/30/2015
Budget preparation and execution (w/ MCD staff visit)4/30/2015
Public financial management6/8/2015
Budget preparation and execution (w/ MCD staff visit)6/8/2015
Legal Department
CBS board of directors meetings procedures2/11/2014
CBS conduct and ethics rules3/1/2014
CBS and the MOF MoU on the CBS as a financial and fiscal agent3/11/2014
Monetary and Capital Markets Department
Currency reform8/26/2013
CBS accounting and financial reporting workshop10/27/2013
Support to financial governance committee12/9/2013
Support to financial governance committee12/10/2013
Support to financial governance committee1/20/2014
Support to financial governance committee2/23/2014
Advice to financial governance committee4/22/2014
Support to financial governance committee5/28/2014
Support to financial governance committee7/29/2014
Banking supervision and regulation9/1/2014
Support to financial governance committee9/8/2014
Central bank governance9/15/2014
Support to financial governance committee10/27/2014
Banking supervision and regulation11/10/2014
Support to financial governance committee12/2/2014
CBS Board orientation course12/2/2014
Participation in the FGC meeting1/26/2015
Central bank governance5/10/2015
Central bank governance6/18/2015
Statistics Department
Real sector statistics training1/27/2014
Consumer price index1/12/2015
Multisector statistics training4/29/2015
Real sector statistics (w/ MCD staff visit)6/7/2015

Resident Representative

Mr. Samba Thiam, resident representative for Somalia, has been posted in Nairobi since December 1, 2014.

IMF-World Bank Collaboration

(As of June 30, 2015)

The IMF and the World Bank Group country teams for Somalia maintain close working relations and dialogue on macroeconomic and structural issues. Collaboration is becoming more regular as both institutions scale up their engagement with the Somalia. The following are notable areas of collaboration:

  • Fiscal: The IMF and the World Bank have collaborated closely on fiscal policy matters. There is an agreement on fiscal priorities and policies between the two institutions. Specifically, both teams have urged the authorities to: (i) prepare and execute a realistic budget; (ii) develop an emergency revenue mobilization plan; and, (iii) find agreement between federal and sub-national governments on fiscal federalism. There has been extensive collaboration on public finance management issues, particularly, on: (i) the design of the Treasury Single Account; (ii) improvements to the Chart of Accounts; and, (iii) the implementation of the Financial Management Information System. More recently, the IMF and World Bank teams initiated preparatory work on developing a macro-fiscal framework and conducting a debt sustainability analysis. Additionally, the teams have collaborated closely in assisting the authorities with the preparation and management of the 2015 budget. The assistance was provided by an IMF’s Fiscal Affairs Department public financial management expert who joined several missions of the IMF’s Middle East and Central Asia Department, and subsequently travelled to Mogadishu under a World Bank-funded contract to operationalize fiscal issues discussed and agreed with the authorities.

  • External debt statistics: In 2014, the IMF and the World Bank collaborated in the establishment of the Technical Working Group on Somalia’s Debt. The group has met twice since the 2014 Spring Meetings.

  • Macroeconomic statistics: Somalia’s macroeconomic statistics depend upon collaboration between the IMF and the World Bank. At present, there are two significant examples: (i) a World Bank funded household survey has been conducted in Somaliland, with enumeration of Mogadishu scheduled for late 2015. The results of the World Bank household survey will enable the IMF to provide assistance in delivering: (a) objective estimates for household final consumption expenditure to derive GDP; and, (b) appropriate expenditure patterns for estimating the Consumer Price Index; and, (ii) the recently implemented Somali Financial Management Information System which provides revenue and expenditure data for most of the activities conducted by the Federal Government of Somalia.

Relations with the World Bank Group3

(As of June 30, 2015)

1. The Somalia Interim Strategy Note (ISN) was endorsed by the World Bank Board in December 2013. Its objective is to lay the foundations for a solid poverty reduction strategy and shared prosperity. These goals will be reached by delivering on selected priorities under the Peace and State-building Goals (PSGs) of the Somali Compact, a high level mutual accountability framework endorsed at the Brussels Conference in September 2013. The ISN is structured around two priorities: (i) strengthening core economic institutions; and, (ii) expanding economic opportunity.

2. Under Priority I (Strengthening Core Economic Institutions), the World Bank is focusing on improving economic governance, including macro-fiscal and public finance management, as well as statistical capacity and supporting the establishment and implementation of a sound regulatory framework in strategic economic sectors. Key trust-funded activities under this area include: (i) a set of core systems strengthening projects (the Recurrent Cost and Reform Financing, Public Financial Management Strengthening, and Capacity Injection); (ii) a financial governance program; (iii) an information and communications technology (ICT) regulatory support project; and, (iv) a petroleum sector program. Policy dialogue and economic and sector work focuses inter alia on macro- and fiscal planning, revenue mobilization, inter-governmental fiscal relations, and statistical strengthening and socio-economic data collection.

3. Under Priority 2 (Expanding Economic Opportunity), the World Bank is focusing on supporting job creation through private sector investment through public-private partnerships (PPPs), public private dialogue, and targeted financial support; as well as financing basic rehabilitation of infrastructure for employment generation and productivity. Key activities under this priority include: (i) a private and financial sector development project; (ii) an urban development project; and, (iii) an energy sector support project. While the UN leads assistance in both the health and education sectors, the World Bank is preparing the ground programming with analytical work.

Active Projects and Pipeline

4. As Somalia is in arrears to the World Bank, the World Bank project portfolio is primarily supported by three trust funds: (i) the Somalia Multi-Partner Fund (MPF), a multi-donor trust fund (MDTF) launched in August 2014 with approximately US$175 million in contributions from six donors and expected to grow to US$250 million over the next two years; 4 (ii) the State- and Peace-Building Fund (SPF), a World Bank-administered global MDTF has contributed US$28.9 million to Somalia since 2012;5 and, (iii) Som-PREP II, a US$24.7 million MDTF focused on private sector development supported by Denmark, the United Kingdom, the World Bank and the SPF. The active portfolio consists of 6 projects totaling US$39.7 million. 72 percent of the funding has been disbursed.

Active Portfolio

ProjectAppraised (US$M)Disbursed (US$M)
Somalia Private Sector Re-Engagement Project Phase II (Som-PREP II)24.722.3
Petroleum Sector Inclusive Development4.00.4
Financial Governance Policy Dialogue2.00.6
Knowledge for Operations & Political Economy (SKOPE)2.51.3
Somalia PFM Capacity Strengthening Project4.52.8
Support to the ICT Sector2.01.2
Total39.728.6

5. Somalia Private Sector Development Re-engagement Program Phase II (Som-PREP II): Som-PREP II, has been primarily focused on Somaliland. Its activities are mostly complete. Its objective was to improve access to markets and generate employment in key productive and service sectors. The component-level objectives of the program focused on: (i) improving the investment climate and strengthening public-private dialogue; (ii) strengthening banking supervision and legal frameworks; (iii) promoting value chain development; (iv) supporting PPPs in ports and solid waste; (v) providing MSME financing to the private sector; and, (iv) identifying economic sector work constraints to private sector-led growth and job creation with a particular focus on key economic sectors.

6. Petroleum Sector Inclusive Development: Funded by the MFP, the objectives of this project are to: (i) facilitate a process to harmonize issues of ownership, control and revenue sharing in the petroleum sector; (ii) support the development of a petroleum strategy and a policy, legal and fiscal framework; and, (iii) build government capacity to negotiate and manage petroleum contracts.

7. Financial Governance Policy Dialogue: Funded by the MPF, the objective of this program is to provide technical advice and facilitate policy dialogue to strengthen transparency and accountability in the areas of strategic public procurement and concessions, asset recovery, and other selected areas of financial governance. In 2014 the FGS and the international community established the Financial Governance Committee (FGC), a high-level institution to help the Somali authorities improve governance. This project will provide assistance to the FGC with: (i) predictable and reliable funding for its basic operations; and, (ii) technical assistance to help advance its work program during the FGC’s second year.

8. Somalia Knowledge for Operations and Political Economy (SKOPE): Funded by the SPF, the objectives of this program are to: (i) enhance the development impact of domestic policies and development partner interventions through better knowledge of socio-economic realities as well as political economy constraints; (ii) promote basic accountability through better information on availability and use of public resources; and, (iii) revitalize the strategic planning process. SKOPE activities fall under three broad components: (i) collecting and analyzing data, as well as developing TA-related activities; (ii) understanding political economy constraints; and (iii) supporting strategic planning at federal and regional levels.

9. Public Financial Management Capacity Strengthening, Phase I: Funded by the SPF, the objective of this project is to establish systems for more transparent and accountable management and use of public funds in Somalia. Effective since early 2014, the project was launched as a pilot to lay the foundations for a larger scale public financial management program supported through the MPF. The project focuses on public financial management reform oversight, piloting one Financial Management Information System, and establishing expenditure control, procurement, accounting, and reporting systems.

10. ICT Sector Support, Phase I: Funded by the SPF, the objective of this pilot project is to: (i) lay foundations for a larger scale program under the MP; and, (ii) contribute towards the process of developing a regulatory framework for the telecommunications sector and building an ICT infrastructure in Somalia. The project focuses on supporting open access to international bandwidth and setting up communication rooms and facilities for government.

Pipeline

There is a significant pipeline of activities, many of which are nearing effectiveness, totaling over US$255 million.

Pipeline (including Pending Effectiveness)

ProjectAppraised Amount (US$M)
Recurrent Cost and Reform Financing Program, Phase II*144.0
Somalia Core Economic Institutions (SCORE) Program30.0
Somalia Capacity Injection Program*20.0
Somalia PFM Strengthening Project II*20.0
ICT Sector Support in Somalia Phase II*14.0
Somali Urban Development Project Feasibility Study4.98
Somalia Power Sector Development Master Plan**1.55
Somali Urban Development ProjectTBD
Somalia Towage Services in Berbera Port4.9
Water for Agro-Pastoral Livelihoods Pilot Project2.0
Total255.4

Pending Effectiveness

Pending Effectiveness

11. Recurrent Cost and Reform Financing (RCRF) Program, Phase II: The objective of the RCRF is to support the government to provide credible and sustainable payroll and to establish the foundation for efficient budget execution and payment systems for the non-security sectors in the FGS and eligible sub-national authorities. Phase II, starting in 2015, will consolidate the gains made under the recently closed Phase I project, and will strengthen macro-fiscal management, central bank reform, and potential target support to expanded social service delivery. Phase II will also explore options for the expansion of recurrent cost support to regional governments.

12. The Somali Core Economic Institutions and Opportunities (SCORE) Program: The objective of the SCORE program, which expands work previously undertaken through Som-PREP II, is to support select core economic institutions linked to trade, financial sector, and private sector development in order to catalyze inward investment and job creation. The project components are: strengthening core institutions in three critical areas of the economy (central banking, the Ministries of Commerce and Industry, and local port and customs authorities). The second component will focus on expanding economic opportunities by providing direct support to the private sector—through technical assistance and grants—to expand economic opportunities in the country.

13. Capacity Injection Project: The objective of this project is to enable the government fill critical capacity gaps in the civil service, and strengthen the capacity of key ministries and agencies to perform core government functions. Project components cover: (i) developing capacity for key cross-cutting government functions; (ii) strengthening the policies and procedures for civil service management; and, (iii) aiding policy management, coordination and monitoring capabilities at the center of government.

14. Public Financial Management Strengthening Project, Phase II: The objective of the project is to establish systems for transparent and accountable public funds management, building on the work launched under Phase I. It focuses on the implementation of medium-term fiscal frameworks to underpin: (i) planning budget preparation; (ii) managing revenue mobilization and tax administration; (iii) developing Somalia’s financial management information system; (iv) managing expenditure control; (v) overseeing procurement, accounting and financial reporting; (vi) conducting auditing and monitoring; and, (vi) establishing structures to oversee public financial management reforms in Somalia.

15. ICT Sector Support in Somalia, Phase II: The objective of the project, continuing from Phase I, is to support the ICT Sector in Somalia by contributing to establish an enabling environment and by encouraging efficiency and equity in access to connectivity. The program aims to allow the ICT sector grow and support connectivity benefits to the government and the citizens. The scope of the work will combine technical assistance, and provision of goods (e.g. communications rooms in ministries), and services (e.g. connectivity and bandwidth support for the higher education).

16. Somali Urban Investment Planning Project (SUIPP) and Somalia Urban Development Project (SUDP): The objective of SUIPP is to support feasibility studies and preliminary design work for a MPF-funded operation targeted at urban infrastructure investment and institutional strengthening in southern Somalia, Puntland and Somaliland, as well as the provision of technical assistance to government agencies to assist them prepare and implement these activities.

17. Somalia Power Sector Development Master Plan: The objective of the program is to support the building blocks for the establishment of a modern energy sector in Somalia. The components of the program are: (i) developing a master plan that sets out priorities and investment sequencing in generation, transmission and generation over a 20-year period, and delivers detailed electrical infrastructure development plans for a number of urban areas; (ii) preparing a “Lighting Africa Somalia” investment; and, (iii) developing a renewable energy resource map for Somalia.

18. Somalia Towage Services in Berbera Port: The objective of the project is to support the development of the Berbera Port by improving throughput, towage capacity and reliability of towage services.

19. Water for Agro-Pastoral Livelihoods Pilot Project: The objective of the project is to build the government to implement small-scale water interventions to provide safe water for human consumption and sufficient quantities of water for livestock as inputs to enhancing fodder and agricultural production in targeted arid lands of Somaliland and Puntland. This will be done by piloting the development and implementation of under-utilized rural water supply technologies.

Economic and Sector Work

20. Statistical Strengthening and Socio-Economic Data Collection: The last nationally representative household surveys providing information on household income, consumption and poverty were conducted in 1985. The World Bank program has worked to address these data gaps in Somaliland, Puntland and Mogadishu. The 2012 Somaliland Enterprise and Household Surveys provided data to produce a poverty assessment; private sector studies; and a CPI base weights and estimates of GDP. In Mogadishu, the World Bank and the Somali Department of Statistics (under the Ministry of Planning and International Cooperation), have successfully implemented the first set of an innovative high-frequency computer assisted household survey that will provide vital household expenditure, socioeconomic and peace and state-building goal data. The instrument is tailored to collect data quickly, in highly insecure settings, and is designed to work in tandem with new econometric techniques to produce a reliable poverty profile and CPI base weights. The World Bank will support the roll-out throughout Somalia of household surveys—combining high frequency surveys and more standard household surveys—to provide regular poverty, social and process data, as well as other relevant information that can be gathered through that instruments. This work will also support poverty assessments and other poverty analytical studies made possible by the data collection exercises.

21. Policies and Institutions for Economic Growth: The World Bank is conducting a source of growth study, with a view to establish a consensus between the government and its partners on priority policies and public investment to enable strong inclusive growth. The work will also support analysis and technical assistance in areas related to private investment, trade, and sectors contributing to growth. This work will also support the building of core capacity of government to design and implement economic development polices.

22. Macroeconomic and Fiscal Planning: The World Bank is working with relevant ministries to support the development of a simple macro-fiscal framework with clear linkages to the annual planning and budgeting process, as well as a simple public investment management framework covering financing modalities and time horizons, that would inform national planning and enable the FGS to improve the appraisal and evaluation of capital investments.

23. Policy Engagement on Revenue Mobilization, Natural Resource Management and Inter-governmental Fiscal Relations: The World Bank plans to undertake an analysis to generate a better understanding of the Somali economy and potential sources for maximizing revenue generation. The work will focus on policy related issues and areas for advisory work, including supporting licensing and regulatory frameworks for telecommunications, ports management, ICT and the extractive industries. This will also include technical support on revenue management options for natural resource revenues. Inter-governmental fiscal relations engagement initially focuses on sharing relevant international experience with the government.

24. Public Expenditure Reviews (PERs): The World Bank is supporting the production of regular PERs at both the federal and regional level, with the goal of closely monitoring the evolution of macro-fiscal and budgetary trends, and providing the underlying analysis for the Recurrent Cost and Reform Project. The World Bank has also supported a Security and Justice Public Expenditure Review as a joint exercise with the UN. This PER aims to unpack the fiscal implications of the current response to the threats facing Somalia, and the long term implications by offering a data-driven and evidence-based analysis, not only of revenues and expenditures of the security sector, but of the violence and insecurity Somalia is facing.

Relations with the African Development Bank6

(As of June 30, 2015)

25. The 2013-15 Somalia Country Brief (CB) was approved by the African Development Bank’s (AfDB) board of directors in April 2013. The CB laid out a scaled-up program reengagement with Somalia. The strategic areas of reengagement include: (i) strengthening governance and institutional capacity; (ii) supporting the re-engagement process of Somalia with the international financial community, through a comprehensive program of arrears clearance and debt relief; (iii) including Somalia in the AfDB’s regional “Drought Resilience and Sustainable Livelihood Programme” (DRSLP); and, (iv) developing infrastructure planning to support the recovery process.

26. The AfDB Somalia Infrastructure Trust Fund (SITF) is currently being prepared. Following the AFDB’s board approval, the trust fund is expected to be operational by the fourth quarter of 2015. The SITF has a medium to longer-term perspective and will focus on infrastructure reconstruction and development, which is aligned with the Peace and State Building Goal 4 (or PSG 4).7 The bulk of activities financed by the SITF will be core infrastructure investment projects in the energy, transport, water, sanitation and ICT sectors. The SITF will also support capacity building, as well as financing and governance activities related to the infrastructure reconstruction program.

27. The AfDB has had 12 operations in Somalia since 2013. Of these, two operations are now finished, nine are national operations, and one is a regional project. The current net commitment is UA 21.7 million, equivalent to about US$33 million. The AfDB’s ongoing portfolio in Somalia comprises many small sized operations, with an average project size of UA 2.17 million. The portfolios average age is 1 year, with a cumulative disbursement rate of 3.75 percent. A brief description of the projects is provided below:

  • The AfDB (in partnership with a host of UN agencies and bilateral donors, and through UNFPA implementation), contributed about US$ 0.5million (of a total cost of US$6.18million) to fund the Population Estimation Survey for Somalia (PESS) project. In May 2015, the official findings from the PESS were released (e.g. 75 percent and 46 percent of Somalis are below the ages of 30 and 15 respectively). The PESS is supposed to assist the FGS and donors in establishing a platform for compiling data and information on Somalia’s socio-economic and poverty baselines; pave the way for an official Census in 2016; and, support the monitoring of progress towards attaining the MDGs.

  • The AfDB has played a key role in supporting Somalia’s re-engagement with international financial institutions (IFIs), particularly through the preparation for arrears clearance, access to HIPC/MDRI debt relief, and building debt management capacity. AfDB’s TA has supported the reconstruction of Somalia’s external debt data, including the setting up and initial capacity (including systems and staff) of a debt management unit in the ministry of finance; and, initial work in developing a strategy for arrears clearance and access to HIPC/MDRI debt relief. The AfDB is currently in Phase 2 of this program.

  • The AfDB is supporting the development of statistical capacity in all regions of Somalia. The UA 0.35 million Somaliland Statistical Capacity Building Project, is currently ongoing. A similar project has also been designed for Puntland. Discussions are being held to develop a comparable project with the FGS. The AfDB is also represented on the High Level Task Force (HLTF) for Statistics in Somalia.8 The HLTF focuses on statistical capacity building and data gathering for the development of an Interim Poverty Reduction Strategy Paper (I-PRSP), establishment of an IMF Staff-Monitored Program (SMP), and monitoring of the Peace and State Building Goals (PSGs) under the Somali Compact. Through its participation in the HLTF, the AfDB is assessing further options to provide statistical capacity building support in Somalia.

  • Through the Economic and Financial Governance Institutional Support Project (EFGISP), the AfDB is helping strengthen macroeconomic and financial management in Somalia. By setting up an improved macroeconomic and budget framework, the AfDB intends to enhance fiscal discipline of the FGS, and, ultimately, the strategic and efficient allocation and use of public resources. Furthermore, the AfDB is playing a lead role through the FGC in implementing the Financial Governance Program. The AfDB has also provided TA to the ministry of finance in building capacity for aid coordination.

  • Since September 1, 2014, the AfDB’s African Legal Support Facility placed a senior legal expert in the FGS to provide legal advisory services to the government in connection to complex commercial negotiations relating to, inter alia, infrastructure, loans, and natural resources. This support will include placing systems, providing capacity building services to government officials, and working on the negotiations of government contracts.

  • The Somalia Drought Resilience and Sustainable Livelihoods Programme (DRSLP) is part of Phase II of the AfDB’s broader initiative to provide support to the drought and famine stricken countries in the Horn of Africa, and build their sustained and long-term resilience. The main components of the DRSLP are: (i) water and natural resource development and management; (ii) livestock infrastructure for market access; and, (iii) capacity building. Funds for the Somalia DRSLP are grants from the Transition Support Department Pillar I (UA 5 million) and the Regional Operations (RO) window (UA 10 million) for a total project of UA 15 million. In view of Somalia’s external debt arrears situation, the FGS cannot administer resources from the RO window and, thus, requires a third party to administer the resources on its behalf (as per AfDB’s rules and regulations). Thus, the FGS, with the endorsement of Puntland and Somaliland, have selected IGAD to administer the RO resources.

  • On the knowledge front, the AfDB conducted the Infrastructure Needs Assessments (INA) in the energy, transport, water and sanitation and ICT sectors. These assessments are key deliverables in the government’s Economic Recovery Plan 2014-15. The ultimate goal is to develop a Somalia Infrastructure Action Plan, which will: (i) assist the government in building an initial project pipeline for the proposed AfDB Multi-Partner Somalia Infrastructure Trust Fund; (ii) provide input into the preparation of Somalia’s i-PRSP; and, (iii) assist in the broad planning, prioritization and resource mobilization for infrastructure interventions. The ICT assessment has been completed and validated. The water and sanitation assessment is expected to be validated in the second quarter of 2015. A final draft of the energy assessment has been distributed to the FGS, and will be validated at a workshop in August 2015. The transport assessment is expected to be completed in the third quarter of 2015. The AfDb continues to play a leadership role in the infrastructure sector by chairing the PSG 4 Sub-working Group on Infrastructure, and engaging with federal and regional governments to rationalise priority infrastructure projects. This has allowed the AfDB to take a leadership role in guiding the reconstruction and development of Somalia’s infrastructure.

Statistical Issues

(As of June 30, 2015)

I. Assessment of Data Adequacy for Surveillance
General: Data provision has serious shortcomings that significantly hamper surveillance caused by institutional weaknesses, lack of source data, and agencies having unclear and overlapping responsibilities. Somalia is rebuilding its macroeconomic statistics after several decades of civil war. The Statistics Law from 1970 remains in effect and is being updated to reflect current conditions and requirements. An impressive achievement is a time series of average monthly prices for several markets in Mogadishu covering several years. State and local authorities also independently produce some statistics for their region while coordination arrangements are being established. A multisector mission was conducted in May 2015 to assess the status and development plans for macro economic statistics. It affirmed work begun by the authorities to develop a strategic plan to guide development of the national statistical system and identified technical assistance requirements over the coming years. Somalia intends to commence reporting of basic IFS data to the IMF as they become available.
National Accounts: A modeled time series for annual GDP has been compiled since 2012. Results are largely dependent upon qualitative assessments of the authorities and broad assumptions applied to limited data. Estimates for government final consumption expenditure are derived from the FGS accounts and assumptions regarding the relative size of the general government sector. Estimates for capital formation are based upon product detail within counterparty data, assumptions about undercoverage, and value added by Somali resident units. A household expenditure survey has been conducted in Somaliland and used to estimate average daily household final consumption expenditure of US$1.60 per day. A household survey in Mogadishu will begin in late 2015 and may result in substantial revisions.
Price Statistics: The FGS began to compile a new experimental Consumer Price Index (CPI) following an IMF mission in January 2015. An expanded basket of 312 items with weights based on expenditure shares derived from other African countries was introduced. When results from the household expenditure survey for Mogadishu are finalized (which should occur in 2016) TA will be provided to introduce new weights and to improve price collection procedures. Somalia does not have a producer price index (PPI).
Government Finance Statistics: FGS commenced use of an automated financial management information system during 2015 to replace the previous manual recording. A mapping between the underlying chart of accounts and GFS items is being developed and is expected to enable production of preliminary GFS estimates for budgetary central government during 2015. The authorities have commenced negotiations to obtain appropriate financial data from state/local units to produce comprehensive estimates for Somalia’s general government sector. Somalia does not currently have any significant public trading enterprises.
Monetary and Financial Statistics: The significance of monetary statistics is limited by the ambiguous status of the Somali shilling. The CBS is currently finalizing the relationship between its accounts and the MFS aggregates and expected to produce monetary statistics for this subsector by the end of 2015. Statistics for the remaining subsectors will be produced as regulatory and reporting arrangements for Somalia’s financial institutions are established over coming months.
Financial sector surveillance: Negligible data will be available for financial sector surveillance until regulatory arrangements are implemented. The authorities are beginning to collect basic balance sheet data from several financial institutions.
External sector statistics: A modeled time series for annual Balance of Payments has been compiled since 2013. Results are largely dependent upon qualitative assessments of the authorities and broad assumptions applied to existing data. Estimates for imports and exports of goods and services are based upon counterparty data and assumptions about undercoverage. The Somalia’s Customs Directorate has agreed to start to collect data on the value of exports and imports that can be used to estimate values of trade in goods. Model-based estimates for remittances and foreign direct investment will be replaced by source data as regulatory and reporting arrangements are established. While Somalia does not compile comprehensive estimates for International Investment Position, data are compiled by the World Bank on the liabilities of Somalia’s general government to the rest of the world. An estimate of Somalia’s reserves will be available when balance sheet data from the CBS are audited and published.
I. Data Standards and Quality
Somalia does not participate in the General Data Dissemination System (GDDS).No data ROSC is available.
II. Reporting to STA
No data in the format of SRFs have been received by STA.
Table of Common Indicators Required for Surveillance
Date of Latest ObservationDate ReceivedFrequency of Data6Frequency of Reporting6Frequency of Publication6Memo Items:7
Data Quality – Methodological SoundnessData Quality – Accuracy and Reliability
Exchange Rates1n.a.n.a.Dn.a.n.a.n.a.n.a.
International Reserve Assets and Reserve Liabilities of the Monetary Authorities212/20146/2015Mn.a.n.a.n.a.n.a.
Reserve/Base Money1n.a.n.a.n.a.n.a.n.a.n.a.n.a.
Broad Money1n.a.n.a.n.a.n.a.n.a.
Central Bank Balance Sheet212/20141/2015Mn.a.n.a.
Consolidated Balance Sheet of the Banking Systemn.a.n.a.n.a.n.a.n.a.
Interest Ratesn.a.n.a.n.a.n.a.n.a.n.a.n.a.
Consumer Price Index303/20156/2015Mn.a.n.a.n.a.n.a.
Revenue, Expenditure, Balance and Composition of Financing – General Governmentn.a.n.a.n.a.n.a.n.a.n.a.n.a.
Revenue, Expenditure, Balance and Composition of Financing – Central Government4n.a.n.a.Mn.a.n.a.
Stocks of Central Government and Central Government-Guaranteed Debtn.a.n.a.n.a.n.a.n.a.n.a.n.a.
External Current Account Balance512/20146/2015An.a.n.a.n.a.n.a.
Exports and Imports of Goods and Services512/20146/2015An.a.n.a.
GDP/GNP512/20146/2015An.a.n.a.n.a.n.a.
Gross External Debtn.a.n.a.n.a.n.a.n.a.n.a.n.a.
International Investment Positionn.a.n.a.n.a.n.a.n.a.n.a.n.a.
Note:The Somali authorities have provided fiscal, exchange rates, and public external debt data to the mission team during staff visits and this consultation.

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise shortterm liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

This reflects the assessment provided in the data ROSC or the Substantive Update for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Note:The Somali authorities have provided fiscal, exchange rates, and public external debt data to the mission team during staff visits and this consultation.

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise shortterm liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

This reflects the assessment provided in the data ROSC or the Substantive Update for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Excluding SDRs allocated and placed in escrow account under the Fourth Amendment of the IMF’s Articles of agreement (SDR 4,156,315), such holdings will be available to Somalia upon the settlement of all overdue obligations to the Fund.

Projections based on existing use of resources and present holdings of SDRs. The projection of charges and interest assumes that overdue principal at the report date (if any) will remain outstanding, but forthcoming obligations will be settled on time.

Prepared by the World Bank.

Current and incoming donors are: Denmark, the European Union, Sweden, Switzerland, United Kingdom, and World Bank State- and Peace-Building Fund. Germany, Italy, and Norway are expected to provide additional contributions in the near-term.

Including transfers to the MPF and Som-PREP II.

Prepared by the African Development Bank.

The Somali New Deal Compact (2014-2016) including the Somaliland Special Arrangement1, outlines Somalia’s key government priorities within five Peace and State Building Goals (PSGs). These are: PSG 1 (Inclusive Politics); PSG 2: (security); PSG 3 (justice), PSG 4 (economic foundations); and PSG 5 (revenue and services).

The HLTF is chaired by the Ministry of Planning and International Cooperation and includes the participation of development partners and relevant Somali institutions.

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