IMF Executive Board Completes the Second and Third Reviews of the Extended Credit Facility for Somalia

IMF News, June 17, 2022

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Published: June 17, 2022

Executive summary and Board decision

Date: June 17, 2022
The Executive Board completed the second and third reviews of the Extended Credit Facility (ECF) arrangement for Somalia.
Immediate disbursement enabled: SDR 14 million (about US$ 18.8 million).
Total disbursement under the ECF and the EFF to date: SDR 271.4 million (about US$ 384.3 million).
Somalia’s ECF arrangement originally approved March 25, 2020, as part of a three-year blended arrangement under the ECF and the EFF.
- Access under the ECF: SDR 252.86 million (155 percent of quota).
- Access under the EFF: SDR 39.57 million (24 percent of quota). The EFF arrangement lapsed immediately because its full amount was made available and drawn at the first purchase.
The ECF arrangement supports implementation of the authorities’ National Development Plan and anchors reforms between the HIPC Decision and Completion Points.

Progress, challenges, and policy priorities (as stated by the Acting Chair)

Somalia has preserved macroeconomic stability and maintained reform momentum despite multiple shocks over the past 18 months.
Key challenges affecting the economy:
- Covid-19
- Protracted elections process
- Severe drought conditions affecting food security and economic activity
- Rising global food and energy prices
Commendable reforms and areas of progress:
- Domestic revenue mobilization
- Strengthening public financial management
- Deepening of Central Bank of Somalia (CBS) capacity and institutional improvements
- Enhancements in governance
Priority reforms and needs:
- Advance reforms to improve AML/CFT and governance
- Finalize HIPC completion point triggers and achieve debt relief agreements with all creditors
- Continued support from development partners for financing and capacity development
- Contributions to the Somalia Country Fund to ensure delivery of IMF technical assistance
Note on international support: 2021 General SDR allocation contributed to support.

Selected economic indicators (Table 1) — Population and national income

Population: 15.2 million, 2021 estimate

Nominal GDP in millions of U.S. dollars

2019: 6,477
2020: 6,965
2021: 7,373
2022: 8,202
2023: 8,839
2024: 9,621
2025: 10,498
2026: 11,461
2027: 12,485

Real GDP in millions of U.S. dollars

2019: 6,016
2020: 5,996
2021: 6,115
2022: 6,281
2023: 6,507
2024: 6,747
2025: 7,011
2026: 7,291
2027: 7,590

Real GDP, annual percentage change

2019: 3.3
2020: -0.3
2021: 2.0
2022: 2.7
2023: 3.6
2024: 3.7
2025: 3.9
2026: 4.0
2027: 4.1

Real GDP per capita in U.S. dollars

2019: 419
2020: 406
2021: 403
2022: 402
2023: 405
2024: 409
2025: 413
2026: 418
2027: 425

CPI (period average, percent change)

2019: 4.5
2020: 4.3
2021: 4.6
2022: 8.5
2023: 3.8
2024: 3.5

CPI (e.o.p., percent change)

2019: 3.1
2020: 4.8
2021: 5.7
2022: 7.8
2023: 3.4
2024: 3.2

Central government finances (percent of GDP) and fiscal indicators

Revenue and grants
- 2019: 5.2
- 2020: 7.1
- 2021: 5.1
- 2022: 6.7
- 2023: 4.2
- 2024: 5.0
- 2025: 5.3
Of which: Tax
- 2019: 2.4
- 2020: 2.2
- 2021: 2.1
Grants 2/
- 2019: 1.7
- 2020: 0.5
- 2021: 0.4
Expenditure (FGS)
- 2019: 4.9
- 2020: 6.8
- 2021: 6.2
- 2022: 7.0
- 2023: 6.1
- 2024: 6.4
Compensation of employees 3/
- 2019: 2.5
- 2020: 2.9
Purchase of non-financial assets
- 2019: 0.2
- 2020: 0.3
- 2021: 0.6
- 2022: 0.7
Overall balance
- 2019: -1.1
- 2020: -0.1
- 2021: -1.9
- 2022: -1.8
- 2023: -1.7
- 2024: -1.5
Net change in the stock of cash
- 2019: 0.1
- 2020: -0.2
- 2021: 0.0
Stock of domestic arrears
- 2019: 1.0
- 2020: 0.9
- 2021: 0.8

Public debt 4/, 5/ (percent of GDP)

2019: 83.0
2020: 57.1
2021: 47.5
2022: 43.8
2023: 7.3
2024: 9.7
2025: 10.6
2026: 11.3
2027: 11.8

Monetary sector and external sector indicators

Monetary Sector

Net Foreign Assets
- 2019: 1.9
- 2020: -2.7
- 2021: -3.3
- 2022: -4.3
Central Bank claims on non-residents 6/
- 2019: 2.3
- 2020: 2.8
- 2021: 3.0
Net Domestic Assets
- 2019: 13.9
- 2020: 14.9
- 2021: 14.3
- 2022: 10.3
- 2023: 10.9
- 2024: 11.6
- 2025: 12.7
- 2026: 13.3
Credit to the private Sector
- 2019: 5.4
- 2020: 6.6
- 2021: 8.2
Broad Money 7/
- 2019: 8.1
- 2020: 11.1
- 2021: 10.0
- 2022: 10.2
- 2023: 11.4
- 2024: 12.6
Net Foreign Assets (Program Definition, in millions of U.S. dollars)
- 2019: 25
- 2020: 80
- 2021: 175
- 2022: …

Balance of payments

Current account balance
- 2019: -10.4
- 2020: -10.8
- 2021: -15.0
- 2022: -14.3
- 2023: -12.4
- 2024: -12.6
- 2025: -13.6
- 2026: -13.5
Trade balance
- 2019: -63.7
- 2020: -63.4
- 2021: -70.7
- 2022: -71.0
- 2023: -69.5
- 2024: -68.0
- 2025: -67.9
- 2026: -67.8
Exports of goods and services
- 2019: 17.3
- 2020: 17.4
- 2021: 16.9
- 2022: 17.2
Imports of goods and services
- 2019: 81.0
- 2020: 77.3
- 2021: 88.1
- 2022: 87.9
- 2023: 86.5
- 2024: 85.2
- 2025: 85.1
- 2026: 85.0
Remittances
- 2019: 24.4
- 2020: 23.2
- 2021: 28.2
- 2022: 29.1
- 2023: 28.9
- 2024: 28.4
Grants
- 2019: 29.4
- 2020: 29.9
- 2021: 28.0
- 2022: 28.7
- 2023: 26.9
- 2024: 26.3
Foreign Direct Investment
- 2019: 6.9
- 2020: 7.7
- 2021: 7.9
- 2022: 8.0
External debt 8/
- 2019: 82.0
- 2020: 56.5
- 2021: 46.8
- 2022: 42.3
- 2023: 6.5
- 2024: 9.1
- 2025: 10.1
- 2026: 10.8

Notes, assumptions, and methodological points (as provided)

Sources: Somali authorities; and Fund staff estimates and projections.
1/ Budget data for the Federal Government of Somalia. Fiscal operations are recorded on a cash basis. GDP data cover the entire territory of Somalia.
2/ A change in World Bank policy for countries with moderate risk of debt distress that replaces the previous 50:50 mix of grants and loans with 100 percent loans (with 50-year maturity), will impact Somalia starting in 2024 because after reaching HIPC Completion Point in 2023, Somalia would be assessed as having a moderate risk of debt distress. Lower grants would result in deficits of 1.5 to 2.0 percent of GDP, higher than the ones projected under the alternative before this policy change. The difference with previous deficit projections would dissipate over time as the previous deficit projections already incorporated a gradual shift away from grants to loans.
3/ The increase in compensation of employees in 2020 reflects a reallocation of allowances from G&S to compensation in the context of Somali National Army reform.
4/ Assumes application of HIPC debt relief and interim HIPC assistance from the Decision Point, and MDRI and "beyond-HIPC" relief at Completion Point in 2023.
5/ Public debt includes arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt. Consistent with the public debt definition in the DSA. It includes net SDR position of the FGS.
6/ Includes FGS grants held abroad.
7/ Primarily desposits at commercial banks. Data before 2020 does not yet include balances held with MMOs.
8/ Consistent with the DSA external debt definition, which reflects the external debt of the country as a whole. Includes the total net SDR position of the central bank. This differs from public external debt reported in Tables 2A, 2B, and 10.

IMF Press Release No. 22/215 — IMF Communications Department, June 17, 2022.