Washington, DC: An International Monetary Fund (IMF) team, led by Ran Bi, conducted discussions with the Somali authorities, led by H.E Bihi Egeh during September 16 – October 8, 2025, and reached a staff-level agreement on the fourth review under the Extended Credit Facility (ECF) arrangement. This agreement is subject to approval of the IMF’s Executive Board.
At the conclusion of the discussions, Ms. Bi issued the following statement:
“I am pleased to announce that the Somali authorities and the IMF team have reached a staff-level agreement on policies to complete the fourth review under the ECF arrangement approved in December 2023 for total access of SDR 75 million (about US$100 million) (Press Release No. 23/463). To mitigate the negative impact of foreign aid cuts and support their reform efforts, the authorities have requested an augmentation of access under the ECF arrangement of SDR 30 million (about US$40 million), to be disbursed in equal tranches at the conclusion of the 4th and the 5th ECF review, respectively. The agreement is subject to approval by the IMF’s Executive Board. Board approval would enable access to SDR 22.5 million (about US$30 million), bringing total disbursements under the arrangement to about US$100 million.
After robust growth of 4.1 percent in 2024, economic prospects have weakened in 2025 – 26 amid significant foreign aid cuts and adverse weather shocks. Real GDP growth is projected at 3 and 3.3 percent in 2025 and 2026, respectively. Inflation is expected to remain stable at around 3.5 percent, while food price pressures are more elevated. Downside risks continue to dominate the near-term outlook, including from protracted foreign aid disruptions and weather shocks which could further worsen the economic outlook.
Despite the difficult economic environment, the authorities remain committed to improving domestic revenue and maintaining fiscal discipline. Fiscal outturn in 2025 has been broadly in line with expectations. In particular, income tax collection has been strong, following the enactment of the new income tax law, and expenditure has remained well within the program target. An overall deficit of 0.3 percent of GDP is expected for 2025. The preliminary 2026 budget plan envisages continued progress in domestic revenue mobilization and expenditure discipline while accommodating additional security and election-related spending. It will also support an expansion of social spending using budget resources to mitigate the negative social impact of foreign aid cuts. With these plans, the overall fiscal deficit in 2026 is projected to be around ¾ percent of GDP.
Fiscal structural reforms have progressed steadily. Key domestic revenue reforms include the ongoing customs modernization and enforcement, implementation of the new income tax law, and improving enforcement of sales and income tax collection. Debt and public financial management should continue to strengthen. The authorities are also building capacity to implement the recently completed legal framework to ensure transparency and accountability in the extractive industries.
The Central Bank of Somalia (CBS) has continued to strengthen its institutional capacity and regulatory framework, promote financial deepening and advance the preparation for the currency exchange and the currency board arrangement. Steady progress has also been made to further strengthen the AML/CFT framework and improve governance.
Continued assistance from multilateral and bilateral partners remains crucial to support the authorities’ policy efforts, especially in light of the high uncertainty and significant downside risks.
The mission would like to thank our counterparts for a constructive and fruitful dialogue. Meetings were held with the Minister of Finance, the Central Bank Governor, other government officials, development partners and private sector representatives.”
