Somalia: Annual Review to Mark One Years Progress and Plan Future of Flagship Finance and Reform Program

Stocks and Financial Services Press Releases Tuesday October 4, 2016 08:17
NAIROBI--4 Oct--World Bank

NAIROBI, October 3, 2016 – The Federal Government of Somalia (FGS) and its State counterparts are convening for the annual review of the country's flagship reform project, supported by the World Bank through the Multi-Partner Fund (MPF).

The Second Recurrent Cost and Reform Financing (RCRF) project, which was launched in Nairobi in October 2015, enables the FGS and its regional counterparts to develop credible, sustainable payroll systems for civil servants while at the same time providing a pathway for improving financial systems and processes across the government. Ultimately it aims to support public provision of basic education and health services through financing of payroll and non-salary recurrent costs. The financing, provided by development partners through the Bank-administered Multi Partner Fund (MPF), lays the foundation for an inter-governmental fiscal framework with eligible administrations and federal member states.

The annual review, which began today and will continue until Wednesday, October 5, will convene technical teams from the federal and regional governments, World Bank and donor observers through a consultative process. The objective of the annual review is for parties to review progress, decide on project benchmarks to track reform progress and anchor dialogue, and to advance the implementation of the RCRF project. Informed by these discussions, the annual review determines next year's project allocations for inclusion in participating governments' 2017 annual budgets. DfID, the EU and Norway will participate as observers. The outcome of the annual review will be published shortly.

Within one year the project has achieved a number of milestones; the payment system for paying over 4,000 FGS civil servants has evolved to allow for electronic transfer to commercial banks. Electronic bank transfers to Puntland and Jubbaland State are ongoing through the Central Bank of Somalia. Galmudug State and Interim South West Administration are working to build their capacities and systems with the expectation that they will soon be able to access funds from the project. The financing provided through RCRF has helped the FGS to stay on track to meet its fiscal targets under the International Monetary Fund (IMF) "Staff Monitored Program," a key milestone on the road towards Somalia's full re-engagement with the international financial institutions. RCRF's support to reform payment systems for non-salary operating costs is also a key IMF requirement.

"The Government has embarked on an ambitious reform program and the RCRF is at the heart of this. The systems being developed are improving transparency and reliability of state functions to deliver services to the people of Somalia", said Bella Bird, World Bank Country Director for Somalia, Burundi, Malawi and Tanzania.

The RCRF is playing a catalytic role in supporting the establishment of an inter-governmental fiscal transfer system as well as providing a platform for collaboration between the Federal and State authorities on fiscal issues. Through the project, Somalia is modernizing its civil service, financing the injection of specially recruited civil servants and advisors, and providing the structures for the state to play it's role in Somalia's development.

The development partners supporting the MPF are the United Kingdom's Department for International Development (DfID), the European Union (EU), the Swedish International Development Cooperation (SIDA), the Royal Norwegian Embassy, Danish International Development Agency (DANIDA), the Swiss Agency for Development Co-operation (SDC), the Ministry of Foreign Affairs of Finland, United States Agency for International Development (USAID), Italy's Ministry of Foreign Affairs and International Cooperation, and the World Bank State- and Peacebuilding Fund (SPF).

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