Somalia Secures New 36-Month Financial Program with IMF to Boost Economic Recovery

MOGADISHU: A new phase of financial support and reform is on the horizon for Somalia as the Federal Government and the International Monetary Fund (IMF) have agreed upon a 36-month staff-level program, aiming to enhance the nation’s financial stability and catalyze economic recovery in the post-debt relief era.

According to Somali National News Agency, Somalia’s authorities have been commended for their successful implementation of financial reforms and improvements in governance, leading to the achievement of debt relief. The completion of the ninth and final review under the Extended Credit Facility (ECF) arrangement has set the stage for Somalia to reach the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative in December 2023.

This forthcoming milestone marks a significant turn in Somalia’s financial journey, ending a prolonged period of grappling with an unsustainable external debt, which peaked at around $5.3 billion since the central government’s collapse in 1991. The new ECF program, commencing post-completion point, is meticulously crafted to guide the policies for this new era, aiming to solidify financial institutions, boost support for small businesses, and spur inclusive economic growth, aligning with the National Development Plan and the Somali government’s long-term vision.

The IMF outlined the program’s key focuses, including maintaining macroeconomic stability, enhancing revenue mobilization and public financial management, bolstering financial sector supervision and regulation, promoting financial inclusion and access to credit, and advancing structural reforms for improved governance and transparency.

Highlighting the essential role of continued international support, the IMF underscored its necessity for Somalia to navigate through challenges such as the COVID-19 pandemic, climate-related shocks, security concerns, and ongoing humanitarian crises, ultimately achieving its developmental objectives.

Mr. Bihi Iman Egeh, the Minister of Finance of the Federal Government of Somalia, expressed his approval of the new agreement, stating that it ensures a seamless transition from the debt relief program to sustained financial rehabilitation activities. “After more than three decades, Somalia is poised to engage directly with international financial institutions, gaining access to concessional financing and grants vital for our development agenda,” he remarked, extending gratitude to the IMF and other international partners for their steadfast support throughout the debt relief journey.