World Bank approves first loans to Somalia in 30 years

[Che -Guevara]

Reuters) - The World Bank has approved $80 million in loans to Somalia to fund public finance reforms, marking the first disbursement to the government of the conflict-ridden country in 30 years, the bank said.

The Washington-based lender, which suspended ties with the country when war broke out in 1991, resumed support for Somalia in 2003, at the time saying it would focus on HIV/AIDS and livestock programs with other organizations, but it has not approved any direct lending to the government to date.

It reopened direct ties with Somalia's federal government in early 2013.

Its board had approved financing of $60 million for the Recurrent Cost and Reform Financing Project and $20 million for the Domestic Revenue and Public Financial Management Capacity Strengthening Project, it said in a statement late on Tuesday.

"They (loans) represent a milestone in Somalia's development and reconstruction," the bank said.

The bank said it would also work with the government in Mogadishu to improve services like education and healthcare, access to clean water, energy and finance for its citizens - under a program called Country Partnership Framework.

Somalia's economy was forecast to grow by an average of between 3.5 and 4.5 percent annually in 2019-2022, when the partnership on social services will run, the bank said.

"While agriculture is key to the economy, it remains vulnerable to shocks. As such, services will continue to be a main driver of growth, especially in the financial, transport and communication and trade sectors," the lender said.

Hit by decades of conflict at the hands of clan militias, Somalia has over the past several years also been pummeled by an insurgency by al Qaeda-linked al Shabaab, famines and maritime piracy.

Parts of the country are still plagued by militant violence, but a degree of stability in the capital in recent years has begun to draw investment from locals and Somalis living abroad.

Last week, the International Monetary Fund said it expected the economy to grow by 3.1 percent this year from 2.3 percent in 2017, as it recovers from drought last year.

(Reporting by George Obulutsa, Editing by Duncan Miriri and William Maclean)

 

[Che -Guevara]

 

[Che -Guevara]

IMF Staff Concludes Visit to Nairobi to Meet the Somali Authorities

September 21, 2018

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

Despite a difficult economic and political environment, the Somali authorities are building a good track record of policy and reform implementation.

The authorities are completing the preparatory steps for the launch of the new national currency, a high priority in their reform agenda.

An International Monetary Fund (IMF) staff team led by Mohamad H. Elhage visited Nairobi, Kenya, from September 15–20 to discuss with the authorities recent macroeconomic developments, progress under the SMP, and the economic outlook.

At the end of the visit, Mr. Elhage issued the following statement:

“The Somali authorities are building a good track record of policy and reform implementation. Despite a difficult economic and political environment, the Federal Government of Somalia has successfully completed two consecutive 12-month Staff-Monitored Programs (SMPs) since May 2016, and on June 20 this year, the Managing Director of the IMF approved a third 12-month SMP (SMP III) covering May 2018–April 2019. This third SMP will continue to lay the foundation so that Somalia obtains debt relief under the Heavily Indebted Poor Country (HIPC) Initiative as soon as feasible once established benchmarks are met.

“Despite recent efforts to further solidify economic stability, security and peace, challenges are significant. Somalia’s fragility is compounded by its vulnerability to natural disasters. The 2016–17 drought, which was followed by floods in some regions in 2018, has led to large humanitarian needs. Due mostly to an increase in internally displaced persons, demand for humanitarian assistance remained elevated in 2018. To address the weak security situation in the country, the Federal Government, jointly with the international community, has renewed its focus on building the capability of Somalia’s security forces and institutions as the country prepares for elections in 2020-21.

“Economic activity is recovering slowly from the 2016–17 drought aided by favorable rains and continued strong remittance inflows. For 2018, growth is projected to recover to 3.1 percent from 2.3 percent and inflation to ease to 3.5 percent, down from 5.3 percent in 2017.

Fiscal performance through July was strong. This was driven by strong domestic revenue collection which largely offset the slow disbursement of grants.

“Performance under SMP III is satisfactory. The three end-June structural benchmarks and all six indicative targets were met. In addition, the September benchmarks are well on track and progress has been made to advance on the December 2018 and March 2019 benchmarks.

“Given the uncertainties about grant disbursements, expenditure will need to be contained. In this regard, the IMF team recommends the following measures for the remainder of 2018 to keep the fiscal framework on track:

Continue to improve revenue collections from recent tax measures, including:

(1) sales tax on imports of goods;

(2) corporate profit tax;

(3) sales taxes and license fees from telecommunication companies; and

(4) continue transferring revenue collection from ministries, departments, and agencies to the Ministry of Finance, including visa charges, and passport and labor registration fees.

Strengthen revenue collection by the Large-and-Medium-Taxpayers' Office, which has been fully operationalized since June.

Ensure that grant projections are consistent with confirmed pledged grants.

“The team commends the authorities’ strong resolve to successfully complete the preparatory steps for the launch of the new national currency, which remains a high priority in their reform agenda. They intend to swiftly establish a currency reform project management plan and administration along with an accountability framework.

“Given the difficult economic and political environment, there are downside risks to the program. However, the authorities’ continued strong commitment to the program, donor support, and efforts to strengthen relations with Federal Member States should mitigate those risks.

“During the visit, the team met with the Finance Minister, Mr. Abdirahman Duale Beileh; Central Bank Governor, Mr. Bashir Issa Ali; and other officials. The team also met with representatives of bilateral and multilateral donors present in Nairobi to support the authorities’ efforts to raise the funding for Phase I of the currency reform, update them on the performance under the SMP, and to coordinate efforts on capacity building activities. The team appreciates the open and candid discussions with the authorities and is grateful for the information made available to staff. Discussions also paved the ground for the 2018 Article IV Consultation visit that will be combined with the first review under SMP III, scheduled for November/December 2018.”

MEDIA RELATIONS

PRESS OFFICER: WAFA AMR

PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

[Xaaji Xunjuf]

The cheesemam and  kheyre are going to eat goobile aya laga ciyaaeaya cabuudwaaq and  garbaharay

 Ilma qanyarena wa  ciidayan

 

[Duufaan]

This is great news for Somalia. Bayle was consistent and goal driven despite all the attacks from the anarchy and mafia groups. A huge spread of corruption and insecurity goes hand in hand. In another hand, the World Bank and IMF are desperate to keep their dominance in world financing after the rise of Chinese money. 

[cadnaan1]

They gonna use this money to pay for the new currency that beyle was talking about.

[Tallaabo]

I thought you guys were Sunni Muslim nation who did not deal in interest!!! So you follow some shariah rules and disregard other bits which do not suit your desires? Why not legalise prostitution and abortion too? And as this money is borrowed in the name of all Somalia citizens and will have to be paid back WITH INTEREST by all Somalia citizens, is the whole lot going to be spent in Mogadishu or will it be divided using the famous 4.5 formula? 

[maakhiri1]

great news, well done Beyle.

[Holac]

Print new durable currency and invalidate existing one to squeeze fraudsters and fake printers.

Mr. Baileh has done it again. Great work by the nation's patriot.

[YoniZ]

Guys, hold your horses and Fatwas It is not a loan but a grant. 

For your information, Somalia does not qualify for World Bank loans. Not until it clears the accumulated arrears, or these loans are forgiven under the heavily indebted poor countries (HIPC) scheme.

Reuters has already corrected its earlier reporting by adding this line at the end of the article (This story corrects to show Somalia is receiving grants, not loans)

https://www.reuters.com/article/us-somalia-worldbank/world-bank-approves-first-loans-to-somalia-in-30-years-idUSKCN1M61EN

 

[Tillamook]

11 hours ago, YoniZ said:

Guys, hold your horses and Fatwas It is not a loan but a grant. 

For your information, Somalia does not qualify for World Bank loans. Not until it clears the accumulated arrears, or these loans are forgiven under the heavily indebted poor countries (HIPC) scheme.

Reuters has already corrected its earlier reporting by adding this line at the end of the article (This story corrects to show Somalia is receiving grants, not loans)

https://www.reuters.com/article/us-somalia-worldbank/world-bank-approves-first-loans-to-somalia-in-30-years-idUSKCN1M61EN

 

Grants are more sensible for Somalia in this stage of development. I mean, which Bank in its right mind would loan money to a government that lacks the capacity and wherewithal to pay it back. 

 

[YoniZ]

We cannot discount the Shark loan firms trying to capitalize on this critical situation.

Dr Bayle revealed today, ghost loans on the tune of $1billion, with no proof of who signed, sitting among the publicized $5.5 billion arrears. 

[YoniZ]

Another very positive news today is the EU's €100 millions grant for budgetary support. 

https://apnews.com/ac620b3df7b64702b7e11e927ca67263

They need to protect this A* team at the Finance ministry and the CBS. There will sure be onslaught on these guys from many unhappy entities (remember the sponsored smear against Dr Bayle during his time as FM) 

[galbeedi]

100 million until 2021 is basically just little over 30 million for the next three years and four months. The same EU just paid close to a billion dollars for the Amison mission few months ago.

Besides, the Somali problem were never about a lack of money. The world bank , the UN and others were throwing money to the Somali issue since 1991. 

Since the day of the collapse  of the state in 1991, the UN and others  poured up to $55 billion dollars with :B" to save Somalia from it self. This money will be spent between Nairobi and Mogadishu hotels. We need those who could help us build infrastructure and production capacity means.

Those who are in Nairobi should be opening a new NGO shop to cash it.

Lacag ayaa nala siiyey. The UN approved $44 million to build the Somali police force (Mogadishu police ) two months ago. There are other millions provided by the world bank from Hargeisa to Mogadishu, and most of that money will ends  up in the pockets of those who never made an honest living in their life.

Waxay u haystaan dhibka Somalia yaala in lacagi xalin karto.

The game continues.

 

[YoniZ]

These two grants are not the  business as usual, money laundering schemes we used to see. 

They came in the form of budgetary support for specific measurable purposes and, after many months of hardwork and confidence building reforms. 

It is easy to sit at your warm sofa and criticize. There are guys who refused to do just that, working tirelessly to turn the page of the past disfunctional decades.

Unless we recognize the work of those who do good things, no matter how small it looks, we will not come out this dark tunnel. These guys at the MF & CBS deserve some credit.