Somalia and the International Monetary Fund (IMF) have reached a staff-level agreement on the third review of the country’s Extended Credit Facility (ECF), paving the way for a US$10 million disbursement, the IMF said on Friday.
The agreement, subject to IMF Executive Board approval, follows discussions held in Nairobi from May 6–15 and brings total disbursements under the US$100 million arrangement to around US$70 million.“Somalia’s economic performance remains strong despite significant challenges,” said Ran Bi, IMF mission chief.
Real GDP growth is estimated at 4% in 2024, supported by agriculture, exports and remittances. Inflation fell to 5.6% by year-end, aided by lower global commodity prices.However, the outlook for 2025 is clouded by aid cuts, irregular rainfalls and economic uncertainty. Growth is projected to slow to 3% and inflation to ease further to 4.9%.
The IMF warned that persistent aid declines could worsen food insecurity, poverty and human development.A small fiscal surplus was recorded in 2024, backed by higher customs duties, sales tax automation and improved tax administration.
The 2025 budget targets a modest fiscal deficit of 0.2% of GDP, while accommodating increased security spending.Fiscal reforms are advancing, with efforts focused on customs modernization, a new income tax law, and stronger tax enforcement.
Somalia is also improving public financial and debt management, and preparing to implement a new Pay and Grade policy. A legal framework for managing extractive industries has been finalized.The Central Bank of Somalia continues to strengthen its regulatory and supervisory roles, promote financial stability, and lead preparations for a new currency exchange and currency board. AML/CFT improvements and governance reforms remain ongoing.
The IMF stressed the importance of sustained support from international partners given the significant downside risks. Discussions involved Somalia’s finance minister, central bank governor, other officials, and development partners.
