SOMALIA-IMF REPORT IMF releases first review of Somalia's economy after decades

Record ID: 145330

  • Title: SOMALIA-IMF REPORT IMF releases first review of Somalia's economy after decades
  • Date: 2nd August 2015
  • Summary: MOGADISHU, SOMALIA (FILE) (REUTERS) MARKET SCENES VARIOUS OF TRADER COUNTING MONEY
  • Embargoed: 17th August 2015 13:00
  • Keywords:
  • Topics: General
  • Reuters ID: LVAA6W2ESKQ3CRK5TV9UJX3ZRCOL
  • Aspect Ratio: 16:9
  • Story Text: In its first review of Somalia's economy in a generation, the International Monetary Fund (IMF) has said the horn of Africa nation has made significant progress since it resumed relations with the international community.
    But Somalia's situation remains fragile, and international support will be vital to rebuild institutions and restore normalcy.
    The IMF's top economist on Somalia, Mission Chief Rogerio Zandamela, said that when his team first began work on the economy, the basic information about the economy hadn't been collected or measured in years.
    He said the IMF has been actively involved in providing technical assistance and policy advice in its key areas of expertise.
    "We were confronted with the situation that we had no data and literally no statistics that we could rely on to prepare the normal quantitative analysis and assessment of economic conditions including the financial conditions in the country. So we, over the course over the last two years, we assisted the Somalis in a number of areas including Central Bank governance, governance also in the fiscal areas, and in terms of preparing the first balance sheet of the Central Bank," said Zandamela.
    The report noted that since 1991, Somalis have suffered greatly from civil war, and the economy deteriorated as the physical infrastructure was destroyed. In addition to the loss of lives, the war worsened the population's living conditions, now among the lowest in the world.
    The Fund said that even though the political and security situations remain challenging, Somalia has made tremendous progress since resuming relations with the IMF on April 12, 2013.
    "According to the UNDP about 73 percent of the Somali population lives below the poverty line of $2 a day. That said, the economic conditions have recovered significantly since the end of the civil war, and in particular, in 2014, GDP is estimated to have grown by about 4 percent, inflation remain low about 1 percent," said Zandamela.
    The report indicates that with modest progress on the security front and an absence of drought, medium-term annual growth should be about 5 percent.
    Growth will remain inadequate to redress poverty and gender disparities.
    The IMF said the federal government, working with the international community, has taken steps to improve governance based on the rule of law and the application of international good practices for fiscal and financial operations.
    The IMF is for now precluded from providing new loans to Somalia, pending clearance of the country's arrears of about 328 million U.S. dollars. But Zandamela said his team can advise the authorities on macroeconomic policies.
    "Medium-term recommendations that are critically important for Somalia to be able to sustain its growth over the medium term, in particular building proper economic and financial institutions including the Central Bank and the Ministry of Finance. We are dealing with issues of the proper management of natural resources, and last, having a proper framework for remittances to continue to flow to Somalia," he said.
    Zandamela said clearing the country's arrears would allow Somalia to develop a track record of performance and pave the way, in due course, to obtain debt relief.
  • Copyright Holder: FILE REUTERS (CAN SELL)
  • Copyright Notice: (c) Copyright Thomson Reuters 2015. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register