Somalia’s economic growth is projected to hit the 3.5% mark this year, the International Monetary Fund (IMF) has said but called for improvement in economic conditions and increased unemployment to reduce poverty.
The global lender said Tuesday the Horn of Africa nation had witnessed an economic rebound since 2017 registering a slowed inflation and narrow trade deficit.
Since 2017, growth has rebounded, inflation has slowed, and the trade deficit has narrowed. “For 2018, real GDP growth is projected at 3.1 percent and end-year inflation at 3.5 percent,” the IMF said in its Staff Monitored Program review Tuesday.
Data through November 2018 show that domestic revenue reached $161 million (31 percent higher than the same period in 2017), and the overall cash fiscal position was in surplus by $8 million, the review noted. The increased revenue, the lender said was a result of improved revenue mobilization, expanded tax base and tax policy formulation.
The IMF, however, urged the government to speed up financial sector reforms with a particular focus on the organizational and governance structure of the Central Bank of Somalia. A new central bank governor is yet to be appointed four months after the term of the former governor expired.
The Washington based lender has also called for regulation of the mobile money transfer sector echoing a similar call by the World Bank in its second economic update last year. According to the World Bank, Somalia’s mobile money sector portends serious macro-economic effects in the event of disruptions.
“Staff urges the authorities to bring the mobile money sector under its supervisory and regulatory umbrella as soon as possible,” the SMP review which is the first in the second SMP read in part. The review also urged authorities in Somalia to bolster the anti‑money laundering and combatting the financing of terrorism (AML/CFT) regulations.