Somalia Country Fund
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Overview and Purpose
- The Somalia Country Fund (SCF) was established by the International Monetary Fund (IMF) in 2015 to provide Somalia with capacity development (CD) support.
- The CD support is closely integrated with the IMF Somalia programs to help strengthen key economic institutions and promote macroeconomic stability and growth, aligned with Somalia’s national development plan and the government’s long-term vision.
- The SCF has ensured continuity, predictability, and flexibility of IMF CD support since its launch in 2015.
Integration, Design, and Delivery
- Key CD needs are identified based on Somalia’s reform objectives and IMF policy advice, following discussions between the Somali authorities, the Somalia country team in the IMF’s Middle East and Central Asia Department (MCD), and IMF departments delivering capacity development.
- CD work plans are designed to be consistent with Somalia’s macroeconomic policy priorities so that CD recommendations feed into the policymaking process.
- The reform agenda is prioritized and sequenced accounting for Somalia’s capacity constraints, with reform implementation anchored by CD support.
- There is close engagement with other development partners to promote complementarities with other CD providers and to foster synergies and traction in reforms.
- Priority areas in the fragile context of Somalia are regularly reassessed to best serve the country.
Achievements and Impact
- The CD provided through the SCF has helped the authorities implement wide-ranging reforms since 2016 in the context of several Staff Monitored- and Extended Credit Facility-programs, as well as the Heavily Indebted Poor Countries (HIPC) initiative.
- The SCF was critical in helping Somalia reach the Heavily Indebted Poor Countries (HIPC) Completion Point in December 2023, which unlocked US$4.5 billion in debt relief for Somalia.
SCF Current Programmatic Phase (2021 to 2025): Capacity Development Areas
- Tax policy:
- Support the design of a sustainable tax policy system that is efficient and fair while achieving revenue mobilization needs.
- Core workstreams include income tax reform, revenue forecasting, policy analysis, and fiscal regime of extractive industries.
- Revenue administration:
- Strengthen the revenue administration’s institutional capacity to implement policy changes and mobilize revenue, focusing on both tax and custom administrations.
- Public financial management (PFM):
- Improve public expenditure efficiency and governance.
- Key CD areas: strengthening the preparation and execution of a credible and transparent budget; improving fiscal reporting; developing the PFM legal framework; leveraging digitalization to improve PFM processes and fiscal transparency.
- Support expanded to cover debt management and public investment management.
- Expenditure Policy:
- Added in 2024 in the post HIPC context.
- Support authorities in managing the Government wage bill, initially focusing on the Pay and Grade policy and pension reform.
- Financial sector legislation, regulation, and supervision:
- Promote financial deepening and financial inclusion while protecting financial stability.
- CD aims to develop regulations for sound commercial banking; build technical capacity in financial sector licensing, regulation, and supervision; improve transparency and encourage sound commercial banking and financial intermediation.
- Extensive CD support is also provided for the design and implementation of a currency board arrangement as part of authorities’ currency reform.
- Central bank organization, governance, and accounting:
- Improve institutional capacity and governance of the Central Bank of Somalia (CBS) to protect macroeconomic and financial stability.
- CD focuses on enhancing CBS governance, transparency, and organization; and strengthening CBS accounting, internal audit, and risk management.
- Macroeconomic statistics:
- Strengthen compilation and dissemination of macroeconomic and financial statistics, including national accounts, consumer price index, government finance statistics, external sector statistics, and monetary and financial statistics.
Funding and Partners
- The SCF is funded by external partners whose contributions are critical to ensuring smooth delivery of IMF technical assistance.
- Current development partners providing financial support to the SCF are Canada, the European Union, Italy, the Kingdom of Saudi Arabia, Sweden, and the United Kingdom.
References