Reuters/The Star - The International Monetary Fund has completed its first economic consultation on Somalia in more than 25 years, saying the economy of the nation that is rebuilding after decades of conflict grew by 3.7 per cent in 2014.
Somalia's growth may lag others in the region but the government will be encouraged by the mere fact that an annual IMF Article IV consultation has taken place, marking a step to rehabilitation, even if the team held discussions in Nairobi.
"Economic activity is estimated to have expanded by 3.7 per cent in 2014, driven by growth in agriculture, construction and telecommunications," the IMF said in a statement at the end of its June 8-18 mission.
"With modest progress on the security front and an absence of drought, medium-term annual growth should be about 5 percent. Nevertheless, growth will remain inadequate to redress poverty and gender disparities," it said.
President Hassan Sheikh Mohamud and his government, supported by international donors and African troops, is battling an insurgency by the Islamist group al Shabaab, which wants to impose its strict interpretation of Islam on Somalia.
An offensive by African Union peacekeepers and Somali troops launched last year has driven the militants out of major urban strongholds and into smaller pockets of territory, but it still stages regular attacks on the capital and elsewhere.
The report said consumer price inflation was 1.3 per cent in 2014. It also forecast real growth for 2015 of 2.7 per cent with inflation remaining subdued at about four per cent.
The IMF noted that the government was still heavily dependent on aid, calling for the strengthening of fiscal institutions and improving revenue raising.
Part of the rebuilding effort involves creating a federal structure to run a country that was torn apart first by fighting between clan warlords and then battles with Islamist rebels.
"Somalia also needs consensus regarding fiscal federalism, including responsibilities for service delivery, and revenue collection and sharing," the IMF said.
The IMF mission discussions included meetings with Finance Minister Mohamad Aden Ibrahim, Deputy Planning Minister Abdullahi Sheikh Ali and Central Bank Governor Bashir Issa Ali.
Read also : Press Release: IMF Staff Completes 2015 Article IV Mission to Somalia