The International Monetary Fund (IMF) on Wednesday commended Somalia’s regime for successfully implementing and sustaining key reforms under the Heavily Indebted Poor Countries (HIPC) Initiative’s Staff-Monitored Program (SMP) that will steer the country towards eventual arrears clearance and debt relief.
This comes after IMF on February 5, 2019, successfully completed the first review under the third 12-month Staff Monitored Program (SMP III) with Somalia, which covers the period between May 2018 and April 2019.
This current SMP, together with the previous two SMPs-covering May 2016 to April 2018-, had been designed to help guide the Somali authorities as they rebuild key economic institutions and undertake critical policy reforms to re-establish macroeconomic stability.
According to the International Monetary Fund, the successful completion of the first two 12-month SMPs as well as satisfactory performance under the current SMP III, reflects the strength of the authorities’ policy and reform commitment.
“Thanks to the authorities’ strong commitment, program implementation has been satisfactory, and capacity continues to strengthen, despite a challenging environment,” IMF said in an official statement.
“This continued commitment will help pave the way towards securing the necessary support, including from donors, for eventual debt relief and arrears clearance under the Heavily Indebted Poor Countries (HIPC) Initiative.”
Despite Somalia’s domestic revenue mobilization strengthening, inflation rate slowing and trade deficit narrowing since 2017, IMF believes that further efforts are needed to improve economic conditions, increase employment and make a significant reduction in poverty in the nation.
“The authorities’ stepped-up efforts to develop the financial sector are welcome. IMF encourages continued progress on implementing the authorities’ action plan for reforming and developing the financial sector,” IMF said.
“Authorities should bring the mobile money sector under its supervisory and regulatory umbrella as soon as possible. They should also comply with anti‑money laundering and terrorism financing regulations to identify gaps in the framework addressed,” the IMF added.