MOGADISHU, Dec. 11 (Xinhua) — The International Monetary Fund (IMF) has approved the disbursement of 10 million U.S. dollars to Somalia to boost the country’s economic reforms.
The latest funding brings Somalia’s total disbursement under the current program, which was originally approved in December 2023, to 60 million dollars, the IMF said in a statement Tuesday evening.
IMF Deputy Managing Director Bo Li said the Somali authorities’ reform momentum has been sustained and performance under the IMF-supported ECF (extended credit facility) arrangement has been strong, despite difficult domestic and regional conditions.
“Key fiscal targets were met, with steady progress on reforms to raise domestic revenues, enhance public financial management, and build debt management capacity,” Li said.
He said continuing fiscal reforms, including strengthening domestic revenue mobilization, is imperative, especially given the prospects of declining external grants and the large social and development spending needs.
The ECF program supports the authorities’ reform strategy, after achieving the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative, to further strengthen key economic institutions and promote macroeconomic stability and growth, the IMF statement said.
It said Somalia’s real gross domestic product (GDP) growth outlook has improved, though challenges and risks remain significant, adding that positive trends in agriculture, exports, and remittances in 2024 are expected to continue in 2025.
“As a result, real GDP growth has been upgraded to 4 percent in 2024 and 2025,” the IMF said, noting that inflation is expected to continue on a downward trend to 4.5 percent by the end of 2024, although the pace is slower than anticipated earlier.
The lender said despite security challenges, the Somali government remains steadfast in its fight against terrorism and continues to work with international partners to ensure a successful transition from the current African Union Transition Mission to a new force by January 2025.
It said near-term risks to the outlook include climate shocks, domestic and regional security developments, lower global growth, and higher commodity prices.
Li lauded the ongoing efforts to strengthen central bank institutional capacity.
He said efforts should continue to promote financial deepening and financial inclusion and advance reforms to improve the fight against money laundering and the financing of terrorism.
Li also welcomed the preparatory work to reintroduce the Somali shilling and adopt a currency board arrangement, noting that a gradual and carefully managed implementation strategy is warranted, with support from the IMF and the World Bank.
“Further reforms to improve governance are encouraged, including measures to enhance transparency and accountability in the petroleum sector,” he said.
