The International Monetary Fund (IMF) has approved a $10 million loan for Somalia, aimed at supporting the country’s ongoing economic reform initiatives.
In a statement on Wednesday, the IMF noted that this latest disbursement brings the total funding under the current Extended Credit Facility (ECF) program, launched in December 2023, to $60 million.
Bo Li, the IMF’s Deputy Managing Director, commended Somalia’s sustained reform momentum despite domestic and regional challenges. “Key fiscal targets were met, with steady progress on domestic revenue mobilization, public financial management, and debt management capacity,” Li said.
The IMF emphasized the importance of continued fiscal reforms to reduce reliance on declining external grants while addressing Somalia’s extensive social and development needs.
The ECF program is designed to strengthen Somalia’s economic institutions, ensure macroeconomic stability, and foster growth. Following positive trends in agriculture, exports, and remittances, the country’s real GDP growth forecast has been upgraded to 4% for both 2024 and 2025. Inflation is projected to decline to 4.5% by the end of 2024, albeit at a slower pace than initially anticipated.
The IMF also acknowledged Somalia’s resilience amid security challenges and its commitment to transitioning from the African Union Transition Mission to a new force by January 2025. However, risks such as climate shocks, security developments, lower global growth, and higher commodity prices remain significant.
Li praised efforts to enhance the institutional capacity of Somalia’s central bank, urging further advancements in financial deepening, financial inclusion, and combating money laundering and terrorism financing.
Preparations to reintroduce the Somali shilling and adopt a currency board arrangement were also highlighted, with the IMF recommending a gradual and well-managed implementation supported by the IMF and World Bank.
Additionally, Li encouraged further governance reforms, particularly in enhancing transparency and accountability within Somalia’s petroleum sector.
