IMF, Somalia deepen engagement, pave way for donor aid

By Reuters

The International Monetary Fund said on Wednesday that its staff have agreed to deepen the Fund’s engagement with Somalia through a 12-month program to assist and monitor the country’s reforms of government operations and fiscal management.

“This is a significant milestone for Somalia, marking the move toward normalizing relations with international financial institutions,” IMF mission chief Rogerio Zandamela said in a statement.

“The program will focus on policies to improve governance and fiscal management, strengthen institutions, foster financial sector development and fill considerable data gaps. Technical assistance and capacity building will be an integral part of the program,” Zandamela said.

The so-called Staff-Monitored Program does not involve financial support to the war-torn African country, but is a necessary step toward a potential IMF loan program. It is expected to start in May pending IMF approval.

It sends a positive signal to international donors about Somalia’s commitment to improve its governance. A similar program for Afghanistan has helped to mobilize billions of dollars in donation pledges.

Somalia is one of the least developed countries in the world and is in the process of building a fully functioning government.

The program will aim to devise ways to increase government revenue and help its budgeting process. It will also initiate currency reform and strengthen licensing and regulation of commercial banks and money transfer businesses.