The IMF mission led by Mohamad H. Elhage, who visited Kenya from Dec. 1 to 6 to meet Somali financial officials and conduct the first review under the 12-month (May 2018-April 2019) Staff-Monitored Program (SMP), said it stands ready to continue supporting Somalia’s reform agenda and capacity development needs by intensifying technical assistance and training.
“Despite a difficult environment, performance under the SMP is strong,” said the mission in a statement.
The IMF team welcomed the government’s commitment to continue improving the fiscal framework for the remainder of 2018 and for 2019 by expanding gains from the new tax measures and by keeping expenditure under control.
The team recommended several measures to strengthen public financial management reform, including expenditure control and minimizing the use of cash advances; improving domestic arrears management capacity; maintaining efforts toward achieving Treasury Single Account; and continuing to make progress toward fiscal federalism.
“The authorities have made considerable progress in implementing steps to support the launch of the new national currency,” said the IMF mission.
The IMF team said it supports the Somali authorities’ effort to continue reaching out to donors to secure funding for the currency reform project.
It noted that economic activity in 2018 is recovering from the 2016-17 drought, noting that a favorable rainy season is supporting the economic recovery, particularly in the agriculture and livestock sectors.
“Increased activities in the construction, communication, commerce, and service sectors are expected to be sustained,” the IMF said, noting that real GDP growth and inflation are projected at 3.1 and 3.5 percent from 2.3 and 5.5 percent in 2017, respectively.
“Overall, fiscal performance through September 2018 has been strong. The fiscal balance at end of September recorded a surplus of 8 million dollars (up from 2.3 million dollars in June), mainly due to continued strong domestic revenue collection,” the Washington-based lender said.
The IMF team stressed the importance of accelerating the implementation of financial sector reforms, with priority placed on restructuring of the central bank and regulating the mobile money sector.
“While progress continues on improving commercial bank and non-banking supervision, there is a need to further strengthen the capacity of the Licensing and Supervision Department,” said the lender.