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IMF Advises Somalia Central Bank On Debt Relief Under HIPC Citing Combating Financing of Terrorism

By Matthew Russell Lee, CJR PFT NY Post

NEW YORK CITY, February 26 – When the International Monetary Fund held its biweekly embargoed media briefing on February 7, Inner City Press submitted five questions including two on Zimbabwe and Barbados which the IMF answered, see below. Now on February 26 from the IMF on Somalia: "IMF staff commends the authorities for implementing key reforms and for satisfactory performance under the Staff-Monitored Program (SMP).  · IMF staff encourages the Somali authorities to sustain their reform momentum which will help pave the way towards eventual arrears clearance and debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.  On February 5, 2019, the Management of the IMF completed the first review under the third 12-month Staff-Monitored Program (SMP III) with Somalia, which covers the period May 2018–April 2019. This current SMP, together with the previous two SMPs (covering May 2016 to April 2018), has been designed to help guide the Somali authorities as they rebuild key economic institutions and undertake critical policy reforms to re-establish macroeconomic stability and establish a track record on sound policy and reform implementation.  Thanks to the authorities’ strong commitment, program implementation has been satisfactory, and capacity continues to strengthen, despite a challenging environment.  Somalia’s economy is recovering but further efforts are needed to secure economic resilience and reduce poverty. 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 exchange rate has remained stable. But further efforts are needed to improve economic conditions, increase employment and make a significant reduction in poverty. Development and humanitarian partners are working with the authorities on enhancing the country’s resilience. Nevertheless, risks to the outlook and program remain.  The authorities’ efforts to improve domestic revenue mobilization has strengthened revenue performance. This reflects efforts to broaden the tax base, and to develop the tax policy framework and administrative capacity to collect taxes. 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. New budget support grants from the EU and the World Bank are increasing grant revenues and providing further support for reforms and social transfers. Staff commends the authorities for their concerted efforts to improve domestic revenue mobilization.  Bold steps to strengthen public financial management need to continue. Reforms to improve the fiscal framework are ongoing, and the authorities continue to exhibit greater fiscal discipline and are implementing regular monthly fiscal operations reporting.  The authorities’ stepped-up efforts to develop the financial sector are welcome. Staff encourages continued progress on implementing the authorities’ action plan (the Financial Sector Roadmap) for reforming and developing the financial sector. Staff urges the rapid implementation of planned changes to the organizational and governance structure of the Central Bank of Somalia. Staff urges the authorities to bring the mobile money sector under its supervisory and regulatory umbrella as soon as possible. Finally, compliance with anti‑money laundering and combating the financing of terrorism (AML/CFT) regulations must be improved and identified gaps in the framework addressed."

From the IMF on February 14 about Uganda, where Sam and Edith Kutesa gave inside information on Crane Bank after taking $500,000 from CEFC China Energy UNSG Antonio Guterres is linked to and covers up for, this: "An IMF mission visited Uganda January 29 to February 12, 2019 to hold discussions for the 2019 Article IV consultations. Economic growth has recovered, while progress on social indicators is mixed and poverty reduction has stalled. Fiscal and external vulnerabilities have increased, reflecting scaled-up infrastructure investment, but also weaknesses in the budget process. To achieve more inclusive growth, the trend towards reduced budget allocations for social sectors should be reversed. Monetary policy has maintained low inflation and can stay the course. Banking sector health has improved, and credit to the private sector has increased.  Recent Economic Developments and Outlook  1. Uganda’s economy maintains momentum. The economy grew by 6.1 percent in FY17/18, supported by improvements in the services sector and a rebound in agriculture from the previous year’s drought. Investor surveys indicate that business conditions and sentiment are strong. Credit to the private sector has improved, helped by a supportive monetary policy stance. Growth is projected at 6.3 percent in FY18/19, as manufacturing, construction, and services continue to expand.  2. Social indicators show mixed progress. Literacy and numeracy improved until 2010 but have stagnated since... In this regard, cabinet’s recent decision to start the accession process to become a member of the Extractive Industries Transparency Initiative is a welcome step. Uganda has achieved important progress in addressing technical compliance issues with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) standards and was removed from the Financial Action Task Force’s (FATF’s) grey list in FY17/18. The authorities are encouraged to continue their work to align their AML/CFT regime with strengthened international standards to ensure that Uganda’s regime is fully compliant with FATF requirements. Uganda’s application to the Egmont Group is one step in this direction.  The mission met with Minister Matia Kasaija, Governor Emmanuel Tumusiime-Mutebile, Permanent Secretary/Secretary to the Treasury Keith Muhakanizi, Deputy Governor Louis Kasekende, Commissioner General Doris Akol, Acting Director Uganda Bureau of Statistics Imelda Atai Musana, senior government officials, civil society, unions, and the private sector. The IMF team welcomes the open and constructive discussions with the authorities and expresses its gratitude for their hospitality and excellent cooperation." On February 12 from IMF spokesperson Gerry Rice on Ecuador, this: "Gerry Rice, the International Monetary Fund’s chief spokesperson, made the following statement on Ecuador today:     “The IMF together with other partner multilateral financial institutions have been engaged in a close dialogue with the Ecuadorian authorities over policies to strengthen Ecuador’s economy for the benefit of all Ecuadorians.     “As part of this partnership, the Ecuadorian authorities and the IMF have agreed to deepen this dialogue with the goal of working toward a possible IMF-supported financial arrangement. This potential IMF supported arrangement would aim to protect the poor and most vulnerable, boost competitiveness and job creation, improve transparency and strengthen the fight against corruption as well as fortify the institutional foundations for dollarization.     “In this context, an IMF team is currently in Quito to continue this dialogue and identify how the IMF can best support the government’s home-grown policy plan." This is the same Ecuador whose foreign minister Maria Fernanda Espinosa Garcés is claiming openness at the UN while inviting bribees and banning the Press...  On February 7 Inner City Press asked, "On Zimbabwe, what is the IMF's comment on reports that " Zimbabwe has cleared its arrears with the IMF, but the country still owes $687 million to the AfDB, $1.4 billion to the World Bank and $322 million to the European Investment Bank" and on recent developments including crackdowns in the country?" Spokesperson Gerry Rice said that the IMF's rules mean it would not lend while arrears exist to other multilateral organizations; on the crackdown he emphasized that all stakeholders should proceed "peacefully." Inner City Press also asked, "On Barbados, former co-chair of Jamaica’s EPOC Richard Byles has said the circumstances which forced Jamaica to turn to the IMF were very similar to those currently faced by Barbados with very high debt to GDP ratios and low foreign reserves. Any IMF comment? Has Barbados reached out to the IMF?" Rice responded about the EFF program initiated last October - here's from the transcript: "There is one other -- a couple of other questions on line I'll take. One is on Barbados where, again, Matthew Lee is asking the former co-chair of Jamaica's EPOC, Richard Byles, has said the circumstances which forced Jamaica to turn to the IMF were very similar to those currently faced by Barbados, very high debt levels, low foreign reserve. Any IMF comment, has Barbados reached out to the IMF, the answer is clearly yes because last October our Board approved a program, a financial program for Barbados under our extended fund facility, one of those instruments that we can use when countries are in difficulty. So just confirming that." And on Zimbabwe: "Then let me take a few calls from this -- there is one on Zimbabwe asking about -- what is our comment on reports that Zimbabwe has cleared its arrears with the IMF but the country still owes, he says 687 million to the African Development Bank, 1.4 billion to the World Bank, 322 million to the European investment bank and on recent developments including the crackdowns in the country.  We have talked quite a bit about Zimbabwe here in the past but just to answer the question, it’s -- I can confirm that -- and I’ve said it before here, that Zimbabwe has cleared, indeed, its arrears to the IMF but arrears remain outstanding to other multilateral creditors, including the World Bank and that severely limits Zimbabwe’s access to international financial support -- Zimbabwe has no arrears to the IMF. Our rules preclude lending given the arrears to other financial institutions.  And on the crackdown he asks about, I don't have too much to add beyond what I said here before, which is that we encourage all stakeholders to collaborate peacefully -- and I think that's the word I would want to stress, is the "peacefully" -- and, you know, try to develop policies that will stabilize the economy and promote sustainable and inclusive growth. It's clearly a very difficult situation there in Zimbabwe and we recognize that." Inner City Press also asked, "On Nigeria, Minister of Budget and National Planning, Senator Udo Udoma, has said the nation’s economy will grow by 3.01 per cent this year, compared to a forecast of two per cent by the International Monetary Fund. What is the IMF's response?  What is the IMF's comment on the making public of US “Field Manual (FM) 3-05.130, Army Special Operations Forces Unconventional Warfare” and its mentions of the IMF? On Cameroon, now the US is cutting military aid due to human rights violations (and a Cameroon minister threatening opponents with a Holocaust). Do these issues, and the continued crackdown in the Southwest and Northwest of the country, have no impact the IMF's continued programs with the Biya government?" Somehow these Cameroon questions don't get answered. We'll have more on this. On Venezuela Rice made it clear that IMF has not spoken with Guaido, saying the IMF will take its guidance from the international community and stating of the IMF, "we don't do politics, we do economics." We'll have more on this.  Back from the IMF's January 17 transcript answering Inner City Press' Zimbabwe question at the time. RICE: "I'll take one more online and that's about Zimbabwe and asking for the status of where we are with the countries debt and relation with the IMF and did we have any comment on the unrest and the government crackdown there is the question.  So in answer to that, I would say that of course Zimbabwe is facing major challenges and just in terms of the unrest, we encourage all stakeholders to collaborate peacefully in developing and implementing policies that will stabilize the economy and promote sustainable and inclusive growth.  On the overall economic situation, debt and the IMF, there has been no real change in what I have said here recently which is Zimbabwe continues to be in a difficult situation regarding debt with protracted arrears to official creditors including multilateral creditors such as the World Bank which severely limits Zimbabwe's access to international financial support.  In terms of the IMF, Zimbabwe has in fact cleared its arrears to us, to the Fund, but our rules preclude lending to a country that is still in or under arrears to other international financial situations. So until that particular situation is resolved, we would not be moving forward with a financial support for Zimbabwe.  I said here the last time that the authority's economic policies we felt were headed in the right direction broadly in terms of addressing the fiscal deficit and monetary policy and so on. I won't repeat what I said the last time but that’s where we are on Zimbabwe."

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