The Somali government on Tuesday refuted a report by made last week by the UN monitoring group on Somalia and Eritrea alleging widespread corruption in the Horn of Africa country's nascent financial institutions.

"It is clear that the report is increasingly dependent upon gossip, guilt-by-association, and hearsay," said presidential spokesman Abdirahman Omar Osman.

"This has resulted in the publication of an unbalanced report which permits damaging, unsubstantiated allegations to become an uncontested matter of public record," he added.

The spokesman expressed concern over "numerous inaccuracies, contradictions and factual gaps," calling for what he termed as proper consultation and formation of an "Adjudication Panel" to assess all future reports of the UN monitoring group.

The UN body, whose mandate is to monitor the arms embargo on Somalia and Eritrea, issues seasonal reports on the situations in both African countries, which have occasionally disputed its findings.

The government spokesman said the UN panel uses "overly clandestine approach" in its research and that members of the team did not visit Mogadishu during their investigations.

He said the group's approach risks undermining "the process of recovery and threatens peace and stability in Somalia."

"The Federal Government will therefore be requesting that the UN Security Council establish a mandatory pre-publication consultation period and appoint an Independent Adjudication Panel for all future Monitoring Group reports," the spokesman demanded.

He said the move will be an "imperative" to the peace process in Somalia and to the integrity of the UN group's future reports about the country, so as to make them "credible, accurate and balanced."

The spokesman said the UN group's allegation that the Central Bank of Somalia was a "slush fund" and that the process of withdrawal from the bank as a "personal patronage system" was a "gross misrepresentation."

"These so-called 'personal withdrawals' are in fact largely proper and legitimate payments to Ministries and government personnel who have no other banking facilities available to them," Osman said.

The spokesman said the Somali government has begun rebuilding state institutions and setting up new standards of public finance management in close collaboration with the International Monetary Fund (IMF) and the World Bank.