## Statement by the IMF Mission on Somalia

_IMF News, November 21, 2016_

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**Canonical URL:** [Statement by the IMF Mission on Somalia](https://www.imf.org/en/news/articles/2016/11/21/pr16519-somalia-statement-by-the-imf-mission)

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## Bibliographic details
- Published: November 21, 2016

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### Mission purpose and scope
- An IMF team led by Mohamad Elhage visited Nairobi from November 14–21 to hold discussions with Somali authorities on the 2016 Article IV Consultation and the first review of the Staff-Monitored Program (SMP).
- Discussions covered: the near-and medium-term outlook, economic risks; reforms at the Central Bank of Somalia (CBS); and policies to sustain growth and revive the financial sector.
- The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

### Macroeconomic outlook and projections
- 2016 real GDP growth is projected at 3.7 percent, driven by the telecommunication, construction and service sectors.
- 2016 consumer price inflation is projected to remain low at about 1.0-1.5 percent, reflecting mainly weak commodity prices.
- 2017 growth is projected to decelerate to about 2.5, while inflation is expected to remain subdued at 1-2 percent.
- Growth is expected to recover to about 3.5–4.5 percent in 2018–19.
- The slower growth rate in 2017 reflects mainly the impact of the weak rainy season on the agriculture sector.
- Construction, telecommunications, and service sectors are projected to continue to register strong growth.
- The external current account deficit is projected to remain large; remittances and grants are expected to cover the deficit.
- The Somali Shilling/U.S. dollar exchange rate has remained stable within the range of about 22,200 and 23,000 since February 2015.

### Program performance and arrears
- The authorities have met all the structural benchmarks and six out of seven quantitative performance targets for the first review of the SMP.
- Domestic government arrears were accumulated due to a shortfall in revenues and delayed donors’ grants disbursement through end of September.
- The authorities were able to settle these new arrears following a recent disbursement of donors’ grants.
- Authorities have taken corrective measures to avoid the occurrence of future arrears, including updating their memorandum of economic and financial policies and establishing a comprehensive roadmap for currency reform.

### Policy priorities and recommended measures
- National development plan:
  - Continue progress on the preparation of a coherent national development plan with a roadmap for institution building and strong program for social safety nets.
  - Improve the business environment to encourage private sector activity.
- Capacity development:
  - Develop domestic capacity and continue to rebuild economic and financial data.
  - The IMF will continue to intensify capacity development activities in Somalia using the multi-donor trust fund to help rebuild Somalia’s institutions and economic and financial infrastructure.
- Fiscal discipline:
  - Continue to strengthen fiscal discipline while ensuring the fiscal framework underscores the need for a realistic tax revenue projection and confirmed external grants to avoid new arrears.
  - Place high priority on enhancing budget execution, adhere to the new arrears management strategy, and broaden the revenue base.
- Currency reform and governance:
  - Adhere to the agenda for currency reform, reinforce central bank governance structure, and improve safeguard procedures.
  - Effective implementation of the anti-money laundering (AML) Law and guidelines is needed to sustain remittance inflows, which are vital for supporting economic growth.

### Meetings and next steps
- During the visit, the team met with Finance Minister Mohamed Adan Ibrahim; the Minister of Planning and International Cooperation Abdirahman Yusuf Hussein Aynte; Central Bank Governor Bashir Issa Ali; Director General at the Office of the President Ali Omar; other officials; and representatives from development partners.
- The Staff Report for the 2016 Article IV Consultation and the first review under the SMP is anticipated to be discussed by the IMF’s Executive Board in late January 2017.

*Press Release No. 16/519 — Statement by the IMF Mission on Somalia — November 21, 2016.*

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## References

- [Somalia and the IMF](http://www.imf.org/external/country/SOM/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [See Press Release No. 16/248](http://www.imf.org/external/np/sec/pr/2016/pr16248.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2016/11/21/pr16519-somalia-statement-by-the-imf-mission_