Washington, DC: An International
Monetary Fund (IMF) team, led by Ms. Laura Jaramillo, conducted discussions
with the Somali authorities in Nairobi, Kenya during September 11-22, 2023
and October 22-24, 20223 and reached a staff-level agreement on economic
policies and reforms to be supported by a new 36-month arrangement, with
access of SDR 75 million (about US$100 million, 46 percent of quota) under
the Extended Credit Facility. This agreement is subject to approval by the
IMF’s Executive Board.
At the conclusion of the discussions, Ms. Jaramillo issued the following
statement:
“Somalia has made considerable progress in rebuilding its economy and
institutions. Under the current ECF-supported program, in place since in
2020, Somalia has maintained strong implementation of wide-ranging reforms
to help strengthen key economic and financial policy institutions. This
progress is paving the way for Somalia to reach the Heavily Indebted Poor
Countries (HIPC) Completion Point in December 2023, at which point Somalia
is expected to receive debt relief and move toward fully normalizing
relations with its key creditors.
However, despite the progress achieved, Somalia faces significant
challenges ahead, including those stemming from economic, social, security,
and climate risks. In 2022, an estimated 54 percent of the population was
living on less than US$ 2.06 per day. Growth is currently insufficient to
reduce widespread poverty, address large social needs, and create sufficient
jobs for the youth. Somalia is highly vulnerable to climate shocks that hurt
growth and hinder poverty reduction efforts.
Faced with these challenges, the authorities have requested a new 3-year
IMF-supported program under the ECF. The program and the related capacity
development support will help Somalia further strengthen key economic
institutions and promote macroeconomic stability and growth, in line with
Somalia’s national development plan and the government’s long-term vision.
Building on progress so far, post-HIPC policy priorities will be to
maintain fiscal sustainability, increase domestic revenues and strengthen
public financial management, promote financial deepening and financial
inclusion, improve the business environment and governance, and enhance
statistics. The authorities will take steps to strengthen capacity for
public debt management and debt risk assessments—as Somalia is expected to
face a structural shift in the size and composition of the FGS external
financing following the HIPC Completion Point—and for public investment
management as the FGS is expected to gradually scale up quality investment
projects. The authorities will also work, with support from the IMF, on
formulating and implementing new monetary and exchange rate policy
frameworks in the context of the currency reform to reintroduce the Somali
shilling as legal tender.
Timely financing and capacity development support from development partners
is essential for the successful implementation of the authorities’ reform
strategy. Contributions from Somalia’s partners to the Somalia Country Fund
are also critical to ensure smooth delivery of IMF technical assistance to
support the authorities as they implement the reform agenda.
The IMF staff team would like to thank the Somali authorities for a
constructive and fruitful dialogue. Meetings were held with the Minister of
Finance, the Central Bank Governor, other senior government officials, and
development partners.”
For more details on IMF-Somalia relations, go to:https://www.imf.org/en/Countries/SOM
