Allison Holland, who led an IMF team discussing Somalia’s Article IV program said the economy continues to recover, supported by vigorous activity in the construction, telecommunications, and financial services sectors in 2018.
“Economic growth is estimated at 2.8 percent, and end-year inflation is estimated at 3.2 percent for 2018. Growth is projected to strengthen to 3.0 percent and inflation to ease further to 3.0 percent, in 2019,” Holland said in a statement issued in Mogadishu on Tuesday.
However, the IMF warned that the outlook remains vulnerable to the still fragile security situation, climate shocks and the still developing institutional capacity, and more is needed to improve economic resilience, increase employment and reduce poverty.
The lender said the government has stepped up efforts to broaden the tax base and strengthen tax administration which it said has been reflected in increased domestic revenue, which reached 184 million U.S. dollars in 2018, almost 30 percent higher than in 2017, and 54 million dollars for the first quarter of 2019.
Holland said the overall cash fiscal position remains in surplus, adding that public financial management continues strengthening, including a sustained improvement in cash forecasting and reduction in the use of cash advances.
“Nevertheless, Somalia remains heavily dependent on grants and more efforts will be needed to create space for critical social and development spending, and put Somalia clearly on the path to fiscal self-sufficiency,” she said.
Holland said the team is encouraged by the authorities’ further efforts to enhance financial sector supervision, especially to bring mobile money service providers within the oversight of the Central Bank of Somalia.
“Staff also welcomes progress in strengthening the implementation of the anti-money laundering and combating the financing of terrorism (AML/CFT) regime, including the commencement of large transaction reporting and efforts to build capacity at the Financial Reporting Center.
“Staff urged the authorities to address remaining gaps in AML/CFT regulation,” Holland said.