Page 8 - Azerbaijan State University of Economics

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

§ In addition to the above detailed challenged, it can be stated as part of macroeconomic
challenges; the economic territory is divided, extreme poverty, relatively high external debt, low
standard of living, wide national saving-investment gap, inflation –the need for stable domestic
supply, total absence of an effective monetary policy, external imbalances –balance of trade, current
account balance, balance of payments, contracted absorptive capacity, to mention but a few;

Macroeconomic Policy

The core objective of macroeconomic policy should be the establishment and strengthening of
macroeconomic stability. Hence, Policymakers should therefore define a set of attainable
macroeconomic targets, such as growth rate, low inflation, low unemployment rate, reducing
external debt, enhancing and increasing net international reserves, and so on.

v Macroeconomic policies in this environment should be focus on the aspects of fiscal policy
and fiscal space improvements, monetary policy and monetary instruments, economic and
investment promoting policy that consistent with the defined NDP targets;

v In the present conditions of the Somali economy, the national economy have substantial
scope for enhancing the level and the quality of growth, and by the main key and potential
growth sectors of the economy. This can be achieved through policies aimed at improving
income distribution. These policies, by and large, are; land tenure reform, changes in marginal
and average tax rates and by type, increases in pro-poor social spending, mobilizing capital funds
and enhancing investment spending into the feasible priority areas and sectors, encouraging
private sector investment and promote its expansion through policy reform and issuing of
legislative regulations, to mention but a few;

v Macroeconomic policy in a developing economy like the Somali economy should be
poverty reduction supportive policy. Consequently, growth is the most important factor
influencing poverty trend in the country;

v Capital accumulation by the private sector and enhancing investment derives growth, and
hence, reducing poverty. Policy for encouraging Somali private sector activities and investment
should be devised and implemented;

v De facto macroeconomic stability is the cornerstone of the government successful efforts to
promote and increasing private sector development, improvement of productive activities and
generating economic growth;

v Economic growth is always considered to be the engine of the poverty reduction in the
economy. However, for the growth to be the pivot of reducing poverty, two key factors that
determine the positive impact of growth on poverty. These are:

• The distribution pattern of the growth’s outcomes by Somali different segments of the
society and by Somali regions, and;

8