Source: Hiiraan Online
By Horn Africa News Staff
Washington D.C. (HOL) — The Executive Board of the International Monetary Fund (IMF) has completed the third review of Somalia’s economic reform program under the Extended Credit Facility (ECF) arrangement, unlocking an immediate disbursement of approximately US $10 million to support the country’s ongoing economic reforms.
The disbursement, equivalent to SDR 7.5 million, brings Somalia’s total receipts under the ECF arrangement to about US $70 million (SDR 52.5 million) since the program’s approval in December 2023. The funds will provide essential budget support for Somalia as it works to strengthen its economic institutions and maintain macroeconomic stability in line with its National Transformation Plan and Centennial Vision 2060.Despite maintaining a strong reform track record, Somalia faces a challenging economic outlook. The IMF projects economic growth to slow to 3% in 2025, down from an estimated 4% in 2024, citing disruptions in foreign aid, adverse weather conditions, and heightened global uncertainty.
In a statement following the review, Nigel Clarke, IMF Deputy Managing Director and Chair, praised Somalia’s reform progress despite global and domestic headwinds.
“The Somali authorities have maintained reform momentum with strong performance under their Fund-supported program. The newly launched National Transformation Plan provides a welcome roadmap to build resilience, promote inclusive growth, and reduce poverty,” Clarke said.
The IMF emphasized the need for Somalia to accelerate domestic revenue mobilization, modernize its customs and tax systems, and strengthen public financial management. Clarke highlighted the importance of implementing the new Income Tax Law, rolling out the Pay and Grade reform, and establishing a new pension regime for civil servants.
Additionally, Somalia was commended for progress in enhancing the capacity of the Central Bank, promoting financial inclusion, and taking steps toward reintroducing the Somali Shilling under a currency board framework.
The IMF also recognized the adoption of a new legal framework for the petroleum sector as a significant milestone, urging Somali authorities to ensure transparent and accountable implementation to strengthen governance and attract investment.
However, the Fund warned that continued donor support remains essential to sustain reform momentum and prevent setbacks, particularly as foreign aid uncertainties weigh heavily on both the economic and social outlook.
