The harsh impact of the ongoing drought on the agricultural sector in Somalia has put about 6.2 million people, about half the Somali population, in need of assistance and at risk of food insecurity, according to IMF.
Somalia’s Prime Minister, Hassan Ali Haire, said in March that 110 people died from hunger in a single region amid a severe drought.
The figure for the south-western Bay region according to a BBC Report, is the first official death toll announced during the crisis. The full impact of the drought on the country is still unknown.
The situation according to IMF is prompting an urgent need for humanitarian and financial assistance from the government and the international community.
The Somali economy is sustained by donors’ grants, remittances, and foreign direct investment mostly by the Somali diaspora. Since 2013, the donor community has given over $4.5 billion in humanitarian and developmental grants, which is essential in contributing to finance Somalia’s trade deficit of nearly 55 percent of GDP (average during 2013-16). The current drought is expected to slow economic activity and raise inflation this year, thereby making donor support all the more critical to sustain growth.
As part of a wider Somali reform initiative, the Central Bank of Somalia and the Federal Government of Somalia are preparing to reissue new Somali shilling banknotes, for the first time in 26 years, to combat the existing massive counterfeiting in the country, restore confidence in the national currency, and to allow the central bank to start implementing monetary policy. The IMF is helping the authorities to implement the measures that need to be in place for the launch of the new currency.
Since resuming its relationship with the country in 2013, the IMF has concluded two annual economic assessments, the first in 2015, marking the first IMF consultation with the country since 1989.
Because Somalia is in arrears with the IMF it cannot benefit from IMF loans; however, the authorities have engaged with the IMF in the context of a 12-month staff-monitored program. This has helped create a framework to support Somalia’s economic reconstruction efforts, rebuild institutional capacity, and establish a track record of policy and reform implementation. The first review of this program was completed in February 2017.