Somalia: The TFG Plan to Mint New Currency Poses Grave Dangers for Somalia

Published: January 19, 2010

Press Release Government of Puntland, Somalia

The Government of Puntland State of Somalia strongly expresses its disapproval to the Transitional Federal Government (TFG) of Somalia’s unilateral plan to issue new currency in an agreement with private contractors in Sudan. Printing new monetary notes with different denominations during this fragile period of political turmoil and economic collapse will have negative implications for Somalia as a whole.
The TFG Parliament, the Somali business community and other economic stakeholders were not consulted in plans to issue the new currency. The Puntland Government, which is the main domestic pillar of the TFG that relies on foreign aid for survival, was also not consulted during this secretive process. This raises a question of hidden motives by unscrupulous elements within the TFG, a government that is dependent on African Union peacekeepers (AMISOM) for its own survival in a few blocks of Mogadishu.
Minting new currency in Somalia at this sensitive time will be a costly blunder and potentially open new political and security challenges for the international community that supports the TFG. The plan to mint new currency lacks legal backing and poses grave dangers to the fragile Somali economy when one considers the following: a) the nonexistence of monetary policy by the Central Bank of Somalia; and b) the absence of statistical knowledge of money, finance, banking and financial market indicators. There has been no assessment of the amount of money in circulation in the country and the amount needed to be injected into the economy, for example.
The top priorities for the TFG should have been to improve security and to rebuild public institutions through a reconciliation process, instead of plotting to flood markets with new money in a unilateral project that endangers Somali families and households.
The Puntland Government strongly denounces the minting of new currency and categorically rejects its circulation in Somalia. This dangerous scheme, if not stopped immediately, will give rise to hyperinflation and lead to economic destabilization.
We urge the Government of Sudan to prevent the minting of this unauthorized Somali currency on its soil. Likewise, we urge members of the international community to halt this illegal scheme and to protect the Somali people and economy.
Office of the Chief Cabinet
Tel: +252 90 790999 / 794030

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