The National Assembly has attempted to reduce government spending for the past few years in efforts to conform to the International Monetary Fund (IMF) and World Bank recommendations. As part of its stabilization efforts, measures have been taken to increase public revenue and control public spending. An IMF agreement under the Poverty Reduction and Growth Facility (PRGF) was undertaken in 1998 and ended in 2003. The government has requested new funds under the PRGF, but IMF officials have suggested that any new funds will be contingent upon the implementation of previously agreed upon reforms. The government agreed to an IMF Staff-Monitored Program for the final six months of 2005 and to simplify various tax exemptions by December 2005. It also promised to introduce a value-added tax (VAT) in the medium run to overcome a fiscal deficit that was slightly diminishing in mid-2005.
Djibouti is in the process of reforming and reorganizing the Ministry of Finance, including financial controls and auditing procedures. The Audit and Fiscal Discipline Office is to publish its annual reports in the Official Journal, beginning in 2005 with the report for 2003. Audited financial statements of public sector companies were also to be published.
Djibouti was reported in 2004 to be actively working on new legislation to bring its public procurement practices in line with the standard set by the Common Market for Eastern and Southern Africa (COMESA), of which it is a member.
The Banque National de Djibouti (BND) is the central bank in the country and supervises a commercial banking consisting of the Banque pour le Commerce et l’Industrie (Mer Rouge), in which Banque Nationale de Paris has a 51% stake, the Banque Indo–Suez, owned by Groupe Indosuez of France and the Commercial Bank of Ethiopia, and the Commercial Bank of Ethiopia, alongside a local development bank, the Banque de Développement de Djibouti.
The Central Bank has instituted mechanisms against money laundering and terrorist financing with the help of the Office of the United Nations against drug and crime (ONUDC).
Two privately-funded institutions, the Al-Baraka Bank and the Banque du Djibouti du Moyen-Orient were placed in liquidation in 1998 and 1999. The process of reimbursing depositors and resolving their accounts is ongoing.
Djibouti is committed to structural reforms to encourage private direct investment, including an Investment Charter to be promulgated in 2006. A new Labor Code was to be passed by the National Assembly by the end of 2005. A Commercial Code was to be discussed in 2006.
Djibouti does not have a stock market.
There are no independent financial institutes in Djibouti.
International Transparency Standards
Djibouti does not yet participate in the International Monetary Fund's General Data Dissemination System but permitted the IMF to publish official reports, such as detailed letters of intent and reports about the IMF’s Staff-Monitored Program.