On September 23, 2019, the Management of the IMF completed the first
review under the fourth Staff-Monitored Program
(SMP IV) with Somalia, which covers the period May 2019–July 2020.
Reforms in SMP IV focus on further efforts to mobilize revenues,
including across the Federal Member States, strengthen public financial
management, enhance financial sector stability, and strengthen
compliance with the framework for anti-money laundering/ combatting the
financing of terrorism.
The authorities’ strong commitment and program implementation has
strengthened capacity despite a challenging environment. Sustaining the
stated commitment of the Finance Ministers of all the Federal Member
States (FMS) to the goals of the program will be critical to mitigating
program implementation risks.
Underlying economic growth remains stable, supported by donor support
and the ambitious and broad reform agenda. However, insecurity and
recurring drought represent key risks to the outlook, and, despite
progress, growth is insufficient to substantially reduce poverty.
The fiscal policy framework continues to strengthen, with domestic
revenue mobilization reaching $126 million in the year to July 2019
exceeding the indicative target of $111 committed to in the program.
Continued progress on public financial management, including to
strengthen expenditure controls and pass the updated Public Financial
Management Law, will be key to continuing to improve governance and
Financial stability reforms are deepening. New mobile money regulations
are welcome, and implementation will be key for supporting financial
stability. Continued efforts to expand the operational and
organizational capacity of the Central Bank of Somalia will underpin
further development of the financial sector more broadly.
Reducing Somalia’s debt to sustainable levels under the Heavily
Indebted Poor Countries (HIPC) Initiative and normalizing relations
with international financial institutions will unlock access to
additional financial resources to address Somalia’s development needs.
Achieving this goal in a timely manner will require a concerted effort
on the part of both the authorities and the international community. To
reach the HIPC Decision Point, the authorities are developing the
necessary track-record in the context of the SMP IV, and work on the
authorities’ ninth National Development Plan, which will form Somalia’s
interim poverty reduction strategy, is complete. Securing sufficient
financing commitments for arrears clearance and debt relief is also
required. The IMF fully supports this goal and is working with its
membership to secure the necessary financial resources to cover the
IMF’s costs of debt relief.