Higher food prices occasioned by poor rainfall early this year will push inflation upwards to 4%, the IMF has said but noted economic growth is projected to stabilize at 2.9%.
An IMF staff statement following a review of the 4th Staff Monitored Programme (SMPIV) last week added ‘key risks to the outlook continue to reflect the difficult security situation and vulnerability to climate shocks.’
The severe drought in many parts of the country has adversely affected livestock and crop farming with the UN warning last week up to six million people are now projected to be food insecure over the coming months. According to the UN Humanitarian agency, UNOCHA, the harvest from the April-June cropping season is the worst since 2011 because of poor and erratic rains, followed by flooding at the end of the rainy season.
DEBT RELIEF PROCESS
On the country’s path to debt relief, the IMF sounded up beat on Somalia’s efforts noting the new mobile regulations, increased revenue mobilization and agreements between the Federal Government and regional government on securing debt relief ‘despite broader political differences’ was encouraging.
The Bretton Woods institution also called on Somali government 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 Heavily Indebted Poor Countries (HIPC) Initiative. It further observed the 9th National Development plan which is intended to meet the HIPC requirement for a Poverty Reduction Strategy, is close to completion.
The international community must however increase its support to fast track the debt relief process, the global lender urged.
“To fulfill the authorities’ goal of reaching the HIPC DP as soon as possible, strong support from the international community will be critical to secure the financing needed to clear Somalia’s arrears to the international financial institutions (IFIs) and debt relief.