Puntland on path of rescuing depreciation of Somali Shillings against dollar
GAROWE, Puntland - Somalia’s northeastern Federal state, Puntland has embarked on efforts to stabilize the market after facing extraordinary Somali currency depreciation, affecting the economy.
Puntland president Said Abdullahi Deni appointed last week a committee led by State’s former President and current Somali Senator Abdirahman Farole to look into the monetary hitches and then recommend solutions.
After assessing the crisis, the committee released a comprehensive report on Saturday geared towards rescuing the dwindling fortunes of the Shillings and exchange stabilization.
The government said it will leave no stone unturned to effectively handle the currency depreciation in Puntland, a situation that threatens to wreck the economy in the state.
The unregulated trade, analysts had warned, would ruin the fortunes of the country.
Some of the recommendations in the report include hundreds of billions of Somali Shillings to be deposited at the Central Bank of Puntland, a move which would reduce the number of Shillings in the market, which is one of the reasons for the economic downturn.
Also, the committee recommended taking 20 percent of the tax at Bosaso port in a shilling. Earlier, the government has been collecting money in form of US dollars in the port, which is the main economic hub for Puntland, the most stable state in Somalia.
This makes Puntland the only administration that has decided to take Somali Shillings in port taxes, while in other places just like Mogadishu, the Federal Government of Somalia collects port revenue in the form of US dollars.
Puntland is striving to stabilize the market and enforce full use of Somali shilling for transactions. To increase the value of the currency, the report adds, the state's bank will determine exchange rates daily and the cash that goes through it, and the government will pay salaries and expenses 20% in the shilling.
In addition, the government of Puntland said it will free the E-money services provided by the private Telecom companies that were previously restricted to empower the Somali Shillings.
Economists say it's firmly the constitutional responsibility of the Somali government to address the devaluation of the old national currency to avoid hyperinflation and dollarization in the Horn of Africa country.
The depreciation of the Somali shilling against the dollar has led to economic difficulties and a rise in living standards while the low-income families and labourers feeling the brunt of the crisis.
The government of Puntland has called on the international community and the financial institutions to help address the situation that needs more attention to avoid an impact on the country's economic recovery and debt relief efforts.
Somalia is battling to regain stability and to stand on its own two feet after over three decades of institutional disorder, terrorism, piracy, and recurrent political crisis.