IMF Grants $100 Million in Additional Financing to Somalia Under Extended Credit Facility

Mogadishu – Somalia is set to receive an additional $100 million in financing under a three-year Extended Credit Facility (ECF) arrangement with the International Monetary Fund (IMF), following commitments to enhanced economic reforms by the Mogadishu authorities.

According to NAM News Network, the financing package, awaiting approval from the fund’s executive board, rewards the significant strides Somalia has made in the reconstruction of its economy and institutions since the commencement of the ECF-supported program in 2020. The IMF team leader, Laura Jaramillo, acknowledged the steadfast efforts of Somalia in implementing comprehensive reforms that have fortified key economic and financial policy institutions.

This financial boost is expected to assist Somalia in achieving the Heavily Indebted Poor Countries (HIPC) Completion Point by December 2023. Reaching this milestone would enable Somalia to secure debt relief and advance towards normalizing relations with major creditors.

The IMF’s appraisal follows an extensive October review of several African nations, including the Democratic Republic of Congo, Rwanda, Senegal, Mozambique, Gambia, Comoros, and Zimbabwe. The IMF teams evaluated the economic, financial, social, and governance reform programs, which are essential for the mobilization of funds to support budgetary concerns and strengthen international reserves.

However, the IMF identified that despite Somalia’s accomplishments, it still confronts considerable challenges, such as those arising from economic, social, security, and climatic risks. Notably, a substantial segment of the population lived on less than $2.06 per day in 2022. With insufficient growth to alleviate pervasive poverty, address social needs, and generate employment for the youth, Somalia remains highly susceptible to climatic disturbances that impede growth and poverty reduction efforts.

Responding to these challenges, Somali authorities have sought a new three-year program under the ECF to bolster key economic institutions and promote macroeconomic stability and growth. Post-HIPC, Somalia aims to sustain fiscal health, increase domestic revenues, enhance public financial management, advance financial inclusion, improve the business environment, governance, and bolster statistical systems.

The story also details the outcomes of the IMF’s discussions with other African nations on their respective economic programs. In DRC, a preliminary agreement on economic policies was reached for the fifth review of the ECF-supported program, while Rwanda finalized agreements on policies necessary for the second review of Rwanda’s Policy Coordination Instrument and program under the Resilience and Sustainability Facility. Mozambique is continuing fruitful discussions, and Gambia has reached a staff-level agreement on a new three-year ECF arrangement. In Comoros, the authorities agreed on economic policies under their ECF-supported program, set to receive a subsequent disbursement upon Executive Board review.