Published On: Wed, Jan 24th, 2018

Somali PM discusses debt relief with IMF Managing Director

Prime Minister Hassan Ali Khayre met with International Monetary Fund (IMF) Managing Director Christine Lagarde on Tuesday on the sidelines of the World Economic Forum in Davos, Switzerland.

According to a press release distributed after their meeting, Lagarde and Prime Minister Khayre discussed the IMF’s support for Somalia, especially through two Staff-Monitored Programs and extensive technical assistance.

Somalia is among the largest recipients of IMF technical assistance.

“The underlying economic conditions in Somalia remain difficult, but the authorities are making strong efforts to rebuild their country. Somalia’s debt relief is a priority for the IMF and every effort is being made to accelerate the process within established procedures.”

Lagarde reiterated the Fund’s continued active engagement with Somalia, including to reach the point that enables it to receive debt relief under the Heavily Indebted Poor Country (HIPC) initiative.

She tweeted “I had a very constructive meeting with Somali PM Hassan Ali Khayre in Davos today. Somalia’s debt relief is a priority for the IMF and every effort is being made to accelerate the process within established procedures.”

Khayre also tweeted “We exchanged views on the way forward for our country’s endeavor to get a debt relief.”

In May, the IMF reached an finalized agreement on its second staff-monitored programme with Somalia after discussions initiated at the London Conference on Somalia.

Somalia’s latest fiscal budget is in line with the financial reforms the government committed to when it entered into the agreement.

Mohammed Elhage, who leads the IMF’s Somalia work, said the introduction of sales and corporate income taxes for telecommunications and the removal of income tax exemption for lawmakers are some of the stipulations of the programme.

The IMF says Somalia’s external debt is about $5.2 billion and that Somalia has not made a service or amortization payment since the onset of the civil war more than 25 years ago.

The IMF forecasts that the Somali economy will grow this year and in 2019 after severe drought and security issues cut growth in 2017.

The fund said the economy was forecast to expand by 2.5 percent in 2018 and 3 percent in 2019, while inflation was seen falling to the range of 2.0 to 2.5 percent in the same period.

They pegged Somalia’s economic growth at 1.8 percent last year — lower than its February 2017 forecast of 2.5 percent — compared with 2.4 percent in 2016.

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