IMF help puts Somalia on road to debt relief -c.bank governo

[Daqane]

 

Tuesday, June 25, 2013

 

 

The International Monetary Fund will offer Somalia technical support and advice, a first step in efforts to secure debt relief for the country emerging from two decades of civil conflict, the central bank governor said on Monday.

 

The IMF officially recognised the Somali government in April, ending a 22-year hiatus during which the African nation was mired in grinding poverty, militancy and maritime piracy, without a functioning central government.

 

Technical help will focus on the basics: Helping the authorities manage a budget, licence commercial banks and compile rudimentary economic data in a country consistently ranked among the world's most corrupt.

 

The Central Bank of Somalia this month published its first annual report since civil war erupted in 1991, putting the total debt stock at $3.2 billion. To win debt relief offered to poor nations, it has to draw up a financial management plan.

 

"It's a programme for the IMF to say that ... their budget is reasonable, their revenue can support the budget, their liquidity is there and their staff and institutions are becoming stronger," the bank's governor, Abdusalam Omer, said after a week of talks with IMF officials in Nairobi.

 

Discussion of monetary policy, fiscal targets and debt relief points to recovery in a nation where two years ago the capital was a frontline in the battle between Islamist militants and African peacekeepers.

 

But a deadly rebel attack on the United Nations in the capital Mogadishu last week underscored how delicate security gains are. Some see debt relief as vital to ensuring cash-starved Somalia does not slide back into anarchy, but few are ready to entrust the government with direct aid.

 

SMALL ASSETS, LARGE LIABILITIES

 

Now the 59-year-old governor is aims to produce a quarterly report that would include a balance sheet for the central bank.

 

"It's a shame that the bank doesn't have a balance sheet," he said. "We don't know what to put on it. We have small assets, a lot of liability."

 

The IMF said on Monday it would assist the Somali government oversee basic monetary and foreign exchange transactions.

 

Somalia was awash with counterfeit money, Omer said, blaming al Qaeda-linked militants who wield influence over swathes of rural southern and central Somalia for printing fake cash.

 

The government agreed on the need for a new currency, he said, but did not give a timeframe.

 

"How long will it take? Will it be a new design or a revitalised old shilling? What will be the value, how do you support that value?" said Omer, adding that these questions about the currency had yet to be answered.

 

Last week's talks with the IMF included a currency expert.

 

Asked when Somalia might qualify for debt relief and the World Bank and IMF's Highly Indebted Poor Country (HIPC) initiative, Omer said there was a range of views.

 

"Those who are favourable to Somalia now are saying it can be done very fast, a year or a year and a half," Omer said, citing Britain as among those holding that position.

 

"Then there are those that remind us always how long it took Sierra Leone and Liberia, and that is maybe two to three years." (Writing by Richard Lough; Editing by Louise Heavens)

[Daqane]

Good financial governance ‘crucial to Somali prosperity’

Public Finance International

Monday, June 24, 2013

By Vivienne Russell

 

 

 

Improved public financial management is a key feature of Somalia’s plan for growth and stability, according to the country’s president Hassan Sheikh Mohamud.

 

In a speech, Mohamud said good governance came behind only security as his priority for the nation.

While ‘considerable progress’ had been made on improving security and rebuilding Somalia’s state institutions, Mohamud said he was under no illusion that significant challenges remain. ‘This is a job in progress but with much still to do,’ he said.

 

On financial capacity, the president said: ‘We are building strong public financial management systems, in particular increasing transparency and strengthening our controls over revenue collection, allocation of budgets, and expenditure of public money.’

 

Mohamud said debt clearance was a ‘crucial next step’ and was needed to allow Somalia to accelerate its governance and institution-building initiatives.

 

He said: ‘We appreciate the early work undertaken by the World Bank, African Development Bank and the International Monetary Fund to re-engage with Somalia and look forward to their further collaboration as we demonstrate progress on our financial management reform plan.

 

‘My vision is for a federal Somalia at peace with itself and its neighbours and which poses no threat to the world; with a resurgent economy, thriving business ventures and sustainable employment so that families are provided for.’

 

An IMF staff mission has been meeting Somali authorities in Nairobi, Kenya, over the past week following its formal recognition of the Federal Government of Somalia last April.

 

The IMF said in a statement that it was ready to provide technical assistance to meet Somalia’s ‘vast needs’.

‘Technical assistance would focus on supporting the finance ministry and the central bank to manage budget functions, to license and supervise commercial banks, and oversee basic monetary and foreign exchange transactions.

 

‘IMF staff will also assist the authorities with establishing systems to collect and process vital economic data in the areas of national accounts and price statistics, money and banking, public finance, and the balance of payments.’

 

The IMF said that Somalia was one of the poorest countries in the world, with a history of internal conflicts, but it had now found ‘an active resurgence of the private sector in the services industry, namely in the communications, construction, and money transfer sectors’.

[Marksman]

The IMF will try to enslave the Somali government with forced loans and terrible conditions such as the privatization of national assets.

 

Read the book 'Confessions of an Economic Hit Man' by John Perkins.

 

Although I some loans will definitely be needed, we should not exceed of what we don't need. And be humble in our progression.

[warsamaale]

privatization is good, i don't know why you think its a terrible idea. get with the program niyow, its the 21st century. governments should never be involved in business, period.

[Duufaan]

3 billion is too little and some governments want to forgive some of it. Somalia is losing 6 billion worth of fish every year alone for foreign countries. with conservative budget and growth this will not be problem at all. IMF was one of the reason that the last Somali government collapsed. this world you have the deal with IMF it should be very minimum.

[warsamaale]

Third world countries governments are notoriously fiscally irresponsible, so expect somali governments to be perpetually in debt.