Somalia may get new currency

Brazil-Arab News Agency
Wednesday, June 26, 2013

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IMF staff met in Kenya with officials of the new government of Somalia and discussed ways to help the country develop a macroeconomic policy. Creating a new currency was one of the issues discussed.

Somalia may have a new currency to be created by the government that was empowered in 2012.The possibility was one of the topics discussed between Somali officials and technicians of the International Monetary Fund (IMF) last week, informed the Fund on Monday (24). At a meeting held in Nairobi, Kenya, replacement of the Somali shilling for another currency was considered a possible measure to establish a new macroeconomic policy for Somalia, which lived a state of civil war between 1991 and 2012 and only returned to having a central government last year.

"The mission welcomed the authorities’ commitment to work towards restoring peace and security, implement good governance and the rule of law, rebuild the economy, reform the financial sector, and orderly address the challenges posed by the possible introduction of a new currency to replace the many official and non-official currencies in circulation," says the Fund.

The IMF also says that a "history of internal conflicts" has reduced Somali human development and infrastructure. It notes that the country's economy is dependent on fishing and farming, but "few economic activities have survived" the years of conflict and much needs to be done for the country to recover. At the meeting, the IMF staff obtained information on the economic reality of the country and said that the Fund may provide technical assistance to meet its "vast" needs.

The statement also points out that this support will be provided so that the Ministry of Finance and the Central Bank can manage the budget, grant licenses, supervise banks and monitor financial transactions. The IMF also proposes to help Somalia establish a "system to collect and process vital economic data in the areas of national accounts and price statistics, money and banking, public finance, and the balance of payments."

Somalia has been a member of the IMF since 1962, but for 22 years the Fund suspended relations with the country because Somalia had not paid a debt of approximately US$ 352 million. On April 12th this year, the IMF recognized the new government of Somalia after the election of President Hassan Sheikh Mohamud, in 2012. Mohamud was the first elected leader in Somalia since the country descended into civil war, in 1991, after the military coup that deposed Mohamed Siad Barre.

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