Page 4 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.74, # 2, 2017, pp. 4-31

TOWARDS A REALISTIC MEDIUM TERM MACROECONOMIC AND FISCAL
FRAMEWORK AND OUTLOOK FOR THE SOMALI NATIONAL ECONOMY
(2017-2019)

Dr. Hashim Al-Ali

Senior Macroeconomic Development Planning Advisor and Somali National Development Plan
(SNDP) Lead Expert –UNDP/Ministry of Planning and International Cooperation (MOPIC),
Mogadishu-Somalia

Received 18 September 2017; accepted 15 December 2017; published online 25 December 2017

Abstract

Somalia has a complex political, security, and developmental environment, and much of its
recent past has been marked by poverty, famine, and recurring violence. However, in 2012, with
the establishment of permanent political institutions and important military offensives, Somalia
entered into a new period; a period where longer term peace seems possible. After decades of
conflict and instability, a federal government was established, built through national dialogue
and consensus. When this Federal Government was formed, Somalia was divided and with no
clear path to reconciliation or unification. Somalia faced the significant challenge of
simultaneously building a nation and institutions, whilst needing to immediately deliver tangible
services to the Somali people. Hence, the challenges that Somalia faces are complex,
multifaceted, and differ according to various political, social, and regional contexts.

The socio-economic conditions of the country are quite poor. Poverty cuts across sectors,
locations, ethnic groups, and genders, and its forms and causes vary. An understanding of
Somalia‘s geography, recent trends in its economy, and consequences of the civil strife is
important when determining the nature and extent of its poverty. Approximately, 69 percent of
Somali population lives below the poverty line. Poverty in Somalia is more pronounced in the
internally displaced persons (IDP) camps, followed by rural and urban areas.

Notwithstanding, for Somali economy, it is absolutely necessary to efficiently manage and use the
human and natural resources which God has given to the nation, to foster and maintain a positive
rate of economic growth, reduce the poverty, and lessen the reliance on international donors’
assistance. The Government recognizes in order to achieve this goal new effective policies must be
implemented and concerted national efforts are needed to encourage and carry out development
and expansion of agriculture, livestock, fisheries, mining, infrastructure that facilitate development,
especially transportation with different modes, marketing and primary productive sectors’ output
related and inputs using manufacturing industries, with particular emphasis on value-chain
activities and industries in which Somalia enjoys comparative advantages.

The principal objective of this paper is to analyse actual macroeconomic and fiscal
characteristics and setting of the Somali economy, and to establish a realistic and consistent
medium term macroeconomic and fiscal framework as well as deriving an economic and fiscal

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