IMF forecasts Somalia’s GDP unchanged at 2.9 pct in 2019

By: Xinhua

MOGADISHU, Aug. 2 (Xinhua) — The International Monetary Fund (IMF) has said Somalia’s gross domestic product (GDP) could remain broadly unchanged at around 2.9 percent in 2019 if normal rains resume later this year.

The IMF, whose board completed review of Somalia last month, said on Thursday night that improved confidence, continued implementation of reforms, and strong donor support will continue to support economic activity in Somalia, especially in the telecom, trade, construction, and financial sectors.

“Despite stronger growth and the improving fiscal position, per capita incomes remain very low and more resources are needed to achieve greater economic resilience and reduce poverty,” IMF said in a statement.

The lender estimated the country’s GDP growth at 2.8 percent in 2018.

According to IMF, Somalia’s inflation is expected at 3 percent in 2019, following 3.2 percent in 2018, warning that poor rainfall in spring weighs on the outlook and threatens food security.

The IMF said the government’s efforts to broaden the tax base and strengthen tax administration has been reflected in increased domestic revenue which has increased by almost 30 percent compared to 2017, supporting a small expansion in health and education spending.

However, it said expenditures continue to be dominated by spending on salaries and other operating costs, especially on security-related expenditures, with little space for critical social and development programs.

“However, substantially boosting development spending and achieving fiscal self-sufficiency will require more effort in terms of revenue mobilization,” it said.

The IMF encouraged continued progress on addressing governance weaknesses and the risk of corruption through the passage of key legislation on revenue, audit, petroleum, statistics, and anti-corruption to help promote better governance and transparency.

The IMF said that Somalia’s external debt is unsustainable at about 4.7 billion U.S. dollars or 100 percent of GDP in 2018, of which 96 percent is in arrears.

It said Somalia will need continued support of the international community to help meet much-needed humanitarian and development needs.