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SOMALIA: "Runaway inflation" hurting livelihoods in Puntland
Sunday, March 23, 2008
Prices of basic commodities, including food, have rocketed in Somalia's self-declared autonomous region of Puntland because of crippling inflation linked to an influx of currency. There has been no legal printing of Somali currency since the collapse of the Siad Barre regime in the early 1990s. Instead, all the local currency in circulation is either printed in the country or imported by individual businessmen. There is no central bank to officiate over monetary policy. The business has, however, gone out of control, thereby fuelling inflation, according to Puntland authorities - hence the imperative to control it. "The government has issued a decree banning the printing and importation of any Somali shilling notes," said Abdirahman Bankah, the Puntland Minister of Information. While the government had previously allowed limited printing, importation and circulation of Somali currency, traders had resorted to printing "fake currency". As a result, a flood of the fake currency invaded the market. "That was hurting the livelihoods of the ordinary people and so the government has decided to put a stop to it," Bankah added. "The currency notes in circulation are enough." Local businessmen in Bossaso, the region’s commercial capital, said the price of a 50kg bag of sugar had risen to 570,000 Somali shillings (US$21) against $15 a year ago, while a 50kg bag of rice was 720,000 shillings ($26) from $14 in March 2007. The price of 50kg of wheat flour had nearly tripled from the equivalent of $12 a year ago to $33 or 900,000 shillings. "That is equal to the [monthly] salary of a policeman," a businessman, Liban Yusuf, said. According to businessmen, the Somali shilling reached an all-time low against the dollar this week. On 20 March, the Somali shilling was exchanged in markets across Puntland at 27,000 to US$1. "This time in 2007, the rate was 15,000." "The printing and importation of the fake currency is a major contributing factor to this runaway inflation," he added. "Many traders have started to quote prices in dollars because we cannot rely on the Somali shilling." However, a businessman involved in printing currency in Puntland, who requested anonymity, told IRIN the Puntland administration was being dishonest about the currency and inflation problem. "They are allowing some people to import, while denying others," he said, accusing some senior government officials of involvement. The Puntland security minister, Abdullahi Said Samatar, told IRIN that it was wrong in the first place for the authorities to allow ordinary people to print currency. He denied knowledge of officials who were involved in printing money. "With this decision [to ban printing more currency] we are righting what went wrong," he said. "The decision follows a popular demand by the people to stop this." |
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