UN envoy to Somalia hails adoption of 2018 government budget as
positive step towards financial empowerment
Mogadishu, 24 December 2017 — The top United Nations official for
Somalia has welcomed the country’s recent adoption of a federal budget
as a major milestone in its economic development, bringing it one step
closer to gaining access to funds from international financial
institutions.
“This is a sign of just how far Somalia has come over the past few
years – it’s getting closer to being able to stand on its feet
financially, like most other members of the international community.
Once key reforms and revenue collection measures are working, Somalia
will be able to receive grants and concessional funding from
international financial institutions, instead of relying so heavily on
donors for its financial needs,” said the Secretary-General’s Special
Representative for Somalia, Michael Keating.
“What this means for the Somalis on the street is the real prospect of
more schools, hospitals and other much-needed infrastructure as the
government will be able to borrow money at fair interest rates on
international markets,” he added. “It’s also a sign of growing
stability, and the previous and current governments should be
commended for their efforts in reaching this point.”
The International Monetary Fund (IMF) says Somalia owes $5.2 billion
to its international creditors. Its parliament approved a 2018 budget
last week, and the $274 million package is a significant step towards
meeting the fiscal reform requirements of the IMF’s ‘Staff Monitored
Program’ (SMP) for the east African country.
The SMP is designed to foster economic reconstruction efforts and
enable countries to establish a track record of policy and reform
implementation. Somalia had already completed its first SMP in
2016-2017.
“We are encouraged by the authorities’ commitment and by the pace of
reforms to restore key economic and financial institutions, and
welcome their efforts to keep the program on track,” the IMF said in a
news release following its meeting with Somali authorities last week.
“The authorities’ performance under the SMP through September 2017 was
broadly satisfactory.”
A final decision on Somalia’s compliance with the requirements of the
SMP for 2017 will be made by the IMF next year, and negotiations will
be initiated on a follow-on SMP.
Special Representative Keating called on the country’s leaders to
ensure that next year’s assessment of Somalia’s progress is a
positive one, with any political differences resolved through dialogue
and a spirit of goodwill.
“Political stability can only help Somalia in this regard,” he said.
“It will help attract both public and private investment, and
reinforce the country’s progress towards financial empowerment.”
Somalia has been unable to service its foreign debt since civil war
broke out in 1991.
Plagued by drought and armed conflict, as well as under-development,
Somalia currently relies on international donors for much of its
financial needs. Federal President Mohamed Abdullahi Mohamed
‘Farmaajo’ has repeatedly called on the country’s international
creditors to grant Somalia debt relief under the so-called Heavily
Indebted Poor Countries Initiative (HIPC), which the IMF and World
Bank established in 1996 to ensure that no poor country faces a debt
burden exceeding its capacity to service and manage.
