IMF Survey : IMF to Help Somalia Rebuild Its Economy

IMF News, June 24, 2013

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IMF resumed engagement after a 22-year interruption in relations with Somalia.
The situation began to improve in the summer of 2012 with the election of a new Federal Parliament and President Hassan Sheikh Mohamud.
In April 2013, the IMF recognized the Federal Government of Somalia (FGS), paving the way to offer technical assistance and policy advice consistent with broad international support and recognition.

Active private sector resurgence in services driven mainly by returning diaspora, notably in communications, construction, and money transfer sectors.
Telecommunication companies have installed country-wide networks of wireless stations and provided affordable equipment enabling connectivity for communities and traders.
Relative peace in greater Mogadishu and elsewhere has led to construction of shopping centers, supermarkets, and housing.
Economic activity has been supported by increased foreign aid flows following international recognition of the Federal Government.
In the absence of licensed commercial banks, informal financial institutions provide shadow banking services and money transfer operations nationwide.
Money transfer companies are now estimated to handle more than US$2 billion in remittances and considerable more in commercial trade.
The Central Bank of Somalia has not issued new bank notes since 1990; most bank notes in circulation are non-official, many issued by warlords.
Reform of the national currency is a high political priority; politicians have pressed the Central Bank of Somalia for early issuance of a new national currency.

Focus on building capacity in key economic agencies: the ministry of finance, the central bank, and the statistics office.
Ministry of finance: help build capacity to raise revenue and manage public finances.
Central bank and banking sector:
- Help staff develop the ability to license and supervise commercial banks.
- Assist in establishing functioning domestic and international payments systems.
- Assist authorities to address challenges posed by many official and counterfeit currencies in circulation.
- Authorities estimate that at least 60 percent of the banknotes in circulation are counterfeit.
Statistics office: assist in establishing systems to collect and process vital economic data in national accounts and price statistics, money and banking, public finance, and the balance of payments.
The IMF will coordinate with the World Bank, African Development Bank, European Union, traditional donors (Japan, Norway, the United States, the United Kingdom), and nontraditional donors (China, Qatar, Saudi Arabia, Turkey, the United Arab Emirates) to avoid duplication and prioritize assistance.

The IMF is for now precluded from providing new loans to Somalia pending clearance of the country's arrears to the IMF of about $353 million.
The IMF will provide technical assistance and advise Somali authorities on macroeconomic policies, including in the context of a staff-monitored program to establish a track record of implementing sound economic policies.
Somalia is eligible for substantial debt relief under the Paris Club and HIPC initiatives after establishing a track record of cooperation with the Fund on policies and payments, including in the context of a staff-monitored program.

Italic: IMF Survey Online, June 24, 2013 — "IMF to Help Somalia Rebuild Its Economy."