{
  "title": "IMF Staff Concludes Visit to Somalia",
  "publication": "IMF News, September 26, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/09/26/pr17369-imf-staff-concludes-visit-to-somalia",
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  "summary": "Press Release No. 17/369; September 26, 2017.",
  "publishDate": "2017-09-26",
  "sections": [
    {
      "heading": "Mission overview",
      "content": "- Press Release No. 17/369; September 26, 2017.\n- IMF team led by Mohamad H. Elhage visited Nairobi from September 18–22 to discuss recent developments, progress under the Staff‑Monitored Program (SMP), and the economic outlook with Somali authorities.\n- The mission conveyed preliminary findings; the views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion."
    },
    {
      "heading": "Context and macroeconomic outlook",
      "content": "- Somalia concluded two Article IV consultations with the Fund since 2015.\n- The authorities entered a 12‑month SMP in May 2016 to help economic reconstruction and establish a track record of policy and reform implementation.\n- IMF management completed the first SMP in June 2017 and approved a new SMP covering the period May 2017–April 2018 at the request of the Federal Government of Somalia (FGS).\n- Key structural and situational challenges:\n  - Economic and social infrastructure remain significantly underdeveloped.\n  - Institutions are weak; poverty remains widespread.\n  - Drought has compounded humanitarian and economic conditions.\n  - Security situation remains fragile and is aggravated by high youth unemployment.\n  - Government fiscal position is weak due to shortfalls in fiscal management, a poor tax collection system, and a heavy external debt burden with no capacity to repay.\n  - Central bank and financial sector are nascent; widespread counterfeiting has diminished confidence in the national currency.\n- 2017 projections reported by staff:\n  - Growth for 2017: 2.4 percent.\n  - Inflation for 2017: 2.9 percent.\n- The drought has depressed economic activity, particularly in remote areas; sustained international support is helping ease the humanitarian crisis.\n- Service sector recovery is reported as steady, notably in telecommunication and transportation sectors.\n- During the first half of 2017 the fiscal position weakened: lower‑than‑expected domestic revenue and expenditure pressures resulted in a fiscal deficit in June."
    },
    {
      "heading": "Staff assessment and findings",
      "content": "- Overall assessment: Authorities show continued commitment to policy and reform implementation despite daunting challenges.\n- Performance under SMP described as broadly satisfactory, supporting the approval of a second SMP.\n- Currency reform: IMF staff welcome progress by the Central Bank of Somalia on reform implementation under the roadmap for currency reform; a number of follow‑up measures were agreed to complete remaining benchmarks for credible currency reform.\n- Domestic arrears: Staff noted repeated accumulation of domestic arrears since the first SMP.\n- Revenue and fiscal management: Serious shortfalls in fiscal management and a poor tax collection system are central weaknesses undermining fiscal position."
    },
    {
      "heading": "Recommendations and required measures",
      "content": "- General: Stronger efforts recommended to improve fiscal discipline, raise domestic revenue, and avoid new domestic arrears to keep the SMP on track.\n- Fiscal framework:\n  - Any expenditure increase must be fully covered by realistic revenue projections or confirmed grants.\n  - Authorities should swiftly implement all revenue measures outlined in the budget and additional fiscal measures recently identified to keep the program on track.\n  - The FGS should remain current on its payment obligations.\n- Domestic revenue:\n  - Implement speedily revenue measures outlined in the budget, particularly the sales tax on telecommunications and hotels.\n- Domestic arrears:\n  - Stronger political commitment is required to avoid new domestic arrears accumulation.\n  - Staff welcomes the authorities’ initiative to work with the IMF to implement an Arrears Management Plan.\n- Currency reform:\n  - Continue momentum of reform implementation at the Central Bank to ensure credible currency reform and implement agreed follow‑up measures to complete remaining benchmarks."
    },
    {
      "heading": "Engagement and meetings",
      "content": "- During the visit the team met with:\n  - Central Bank Governor Mr. Bashir Issa Ali.\n  - Permanent Secretary at the Minister of Planning, Investment and Economic Development Mr. Abdi Dirshe.\n  - Finance Minister Mr. Abdirahman Beileh.\n  - Other officials and representatives of bilateral and multilateral donors.\n- IMF team expressed thanks to Somali authorities for cooperation and open, productive discussions.\n\nIMF Communications Department\n\n---\n\n\n References\n\n- Somalia and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/09/26/pr17369-imf-staff-concludes-visit-to-somalia"
    }
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    "Published: September 26, 2017",
    "Press Release No. 17/369; September 26, 2017.",
    "IMF team led by Mohamad H. Elhage visited Nairobi from September 18–22 to discuss recent developments, progress under the Staff‑Monitored Program (SMP), and the economic outlook with Somali authorities.",
    "The mission conveyed preliminary findings; the views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.",
    "Somalia concluded two Article IV consultations with the Fund since 2015.",
    "The authorities entered a 12‑month SMP in May 2016 to help economic reconstruction and establish a track record of policy and reform implementation.",
    "IMF management completed the first SMP in June 2017 and approved a new SMP covering the period May 2017–April 2018 at the request of the Federal Government of Somalia (FGS).",
    "Key structural and situational challenges:",
    "2017 projections reported by staff:",
    "The drought has depressed economic activity, particularly in remote areas; sustained international support is helping ease the humanitarian crisis.",
    "Service sector recovery is reported as steady, notably in telecommunication and transportation sectors.",
    "During the first half of 2017 the fiscal position weakened: lower‑than‑expected domestic revenue and expenditure pressures resulted in a fiscal deficit in June.",
    "Overall assessment: Authorities show continued commitment to policy and reform implementation despite daunting challenges.",
    "Performance under SMP described as broadly satisfactory, supporting the approval of a second SMP.",
    "Currency reform: IMF staff welcome progress by the Central Bank of Somalia on reform implementation under the roadmap for currency reform; a number of follow‑up measures were agreed to complete remaining benchmarks for credible currency reform.",
    "Domestic arrears: Staff noted repeated accumulation of domestic arrears since the first SMP.",
    "Revenue and fiscal management: Serious shortfalls in fiscal management and a poor tax collection system are central weaknesses undermining fiscal position.",
    "General: Stronger efforts recommended to improve fiscal discipline, raise domestic revenue, and avoid new domestic arrears to keep the SMP on track.",
    "Fiscal framework:",
    "Domestic revenue:",
    "Domestic arrears:",
    "Currency reform:",
    "During the visit the team met with:",
    "IMF team expressed thanks to Somali authorities for cooperation and open, productive discussions.",
    "[Somalia and the IMF](http://www.imf.org/external/country/SOM/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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