MOGADISHU, Sept. 19 (Xinhua) -- The International Monetary Fund (IMF) has projected Somalia's economic growth to remain broadly stable at 2.9 percent in 2019 despite the difficult security situation in the Horn of Africa nation.
An IMF staff team which met with the Somali authorities to undertake the first review under the fourth successive Staff Monitored Program (SMP) - May 2019 - July 2020 said the authorities' continued strong commitment to economic and financial reform is supporting satisfactory performance.
"Inflation is projected to increase temporarily to 4.0 percent in 2019 due to higher food prices as a result of poor rainfall earlier in the year. Key risks to the outlook continue to reflect the difficult security situation and vulnerability to climate shocks," the lender said in a statement issued in Mogadishu on Thursday after the review mission.
It said the IMF team and the Somali authorities reached a staff-level agreement on the completion of the first review under the SMP.
The IMF mission said all the structural benchmarks for the first review - that is the reform measures critical for achieving the goals of SMP IV have been met, and, although risks remain, progress is being made towards meeting those set for the second review.
The IMF mission said the fiscal policy framework continues to strengthen, with domestic revenue mobilization in the year to July exceeding the target set in the program.
According to the lender, Somalia plans to revise up its projection for domestic revenue for 2019 in the forthcoming supplementary budget to reflect this strong performance.
"To ensure critical expenditures can be met even in the event of unexpected revenue shortfalls, the government has decided to set aside some specific savings," it said, welcoming the new mobile money regulations, which represents a further important step in protecting financial stability.
The IMF lauded commitment by the government to secure debt relief under the Heavily Indebted Poor Country (HIPC) Initiative, despite broader political differences.
The IMF team encouraged the government to sustain this cooperation to mitigate key risks to the program.
"The authorities will need to maintain their commitment to the reforms outlined under SMP IV to establish the track record on policies required to reach the Decision Point (DP) under the HIPC Initiative. The authorities' work on their 9th National Development Plan, which they intend to meet the HIPC requirement for a poverty reduction strategy, is close to completion.
