Inflation and state insolvency drove desperate Somali economic reforms in the mid-1980s

Evidence

In an effort to counter soaring inflation (90 percent in 1984) and to bring more hard currency into the national banking system, the government sought to encourage traders to open local foreign exchange accounts. The franco valuta export system was abolished and then reintroduced in a modified form in 1984, and World Bank dollar auctions were instituted in September 1986 in the hope of curtailing the informal money market and narrowing the gap between the official and unofficial exchange rates. At the same time and with some limited success, the government sought to increase its tax revenue by more effective collection and to reduce its expenditure on the sprawling civil service, in which every high school and university graduate had previously had a right to automatic employment. Salary increases were combined with staff cuts and offers of land for agricultural development for prematurely retired civil servants. There was, however, no sign that the government was in a position to introduce sufficiently radical pay and efficiency reforms to enable government employees to abandon their numerous supplementary unofficial sources of income, without which they could not possibly survive – a month’s wages would not pay a week’s rent. — I.M. Lewis, I. M. Lewis, A Modern History of the Somali_ Nation…, 608

Categorization

• XREF: Staff cuts and land-for-retirement echo the structural adjustment patterns seen across late-1980s African states facing IMF intervention. — connects to: Post-war economic collapse forced Somalia to accept IMF liberalisation — I.M. Lewis, I. M. Lewis, A Modern History of the Somali_ Nation…, 606; Somalia’s government weakened clan and religious authorities to build the modern state — I.M. Lewis, I. M. Lewis, A Modern History of the Somali_ Nation…, 407

Related

• Post-war economic collapse forced Somalia to accept IMF liberalisation (similarity 0.85)

Broader Connections

• Somalia’s government weakened clan and religious authorities to build the modern state #complicates (0.30) — I.M. Lewis, I. M. Lewis, A Modern History of the Somali_ Nation…, 407