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IMF help puts Somalia on road to debt relief -c.bank governor
Tuesday, June 25, 2013
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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)
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