NAIROBI( Halbeeg News)- A delegation from International Monetary Fund ( IMF) concluded visit to Kenya’s capital, Nairobi.
The IMF staff led by Mohamed H. Elhage stayed in Nairobi on 15-20 September to discuss with Somali authorities microeconomic developments, progress under SMP and economic outlook.
During the visit the team met with the finance minister of federal government, Abdirahman Duale Beyleh, Central bank governor, Bashir Issa Ali and other officials.
The team also met with representatives of bilateral and multilateral donors present in Nairobi to support the authorities’ efforts to raise the funding for Phase I of the currency reform, update them on the performance under the SMP, and to coordinate efforts on capacity building activities.
Issuing a statement at the end of the visit, the team leader of IMF delegation that visited Nairobi, Mr. Elhage commended the federal government of implementing a good reform despite difficult economic and political environment.
“The Somali authorities are building a good track record of policy and reform implementation. Despite a difficult economic and political environment, the Federal Government of Somalia has successfully completed two consecutive 12-month Staff-Monitored Programs (SMPs) since May 2016, and on June 20 this year, the Managing Director of the IMF approved a third 12-month SMP (SMP III) covering May 2018–April 2019. This 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” reads the statement.
IMF also welcomed government’s efforts to build the capability of security forces to deter the security challenges in the country.
“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. 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 in the country, the Federal Government, jointly with the international community, has renewed its focus on building the capability of Somalia’s security forces and institutions as the country prepares for elections in 2020-21”
The statement further read that domestic revenue collection embarked by the federal government led to gradual recovery of Somalia’s economy from the drought that hit the country the year 2016- 2017.
“Economic activity is recovering slowly from the 2016–17 drought aided by favorable 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. Fiscal performance through July was strong. This was driven by strong domestic revenue collection which largely offset the slow disbursement of grants”
“Performance under SMP III is satisfactory. The three end-June structural benchmarks and all six indicative targets were met. In addition, the September benchmarks are well on track and progress has been made to advance on the December 2018 and March 2019 benchmarks”
Finally, the IMF team has given the federal government of Somalia recommendation to implement so as to make sure 2018 fiscal framework is moving on the right direction. Below are the recommendations.
- 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 operationalised since June.
- Ensure that grant projections are consistent with confirmed pledged grants.
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