Press Release No. 25/412

Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of the ECF arrangement for Somalia and approved an augmentation of the program by an amount equivalent to SDR 30 million (about US$40 million). The Board’s approval of the review and augmentation enables an immediate disbursement of SDR 22.5 million (about US$30 million), which will be channeled for budget support, bringing Somalia’s total disbursements under the ECF arrangement to SDR 75 million (about US$100 million).

Somalia’s ECF arrangement was originally approved by the Executive Board on December 19, 2023 (see Press Release No. 23/463 ). The program supports the authorities’ post-HIPC reform strategy to further strengthen key economic institutions and promote macroeconomic stability and growth, in line with Somalia’s National Transformation Plan and Centennial Vision 2060.

Following the Executive Board discussion, Mr. Nigel Clarke, Deputy Managing Director and Chair, made the following statement:

“The Somali authorities have maintained steadfast reform implementation and strong program performance under the Fund-supported Extended Credit Facility Arrangement, despite domestic and global challenges. Notably, persistent and sizeable foreign aid cuts, recurrent climate shocks and elevated uncertainty continue to weigh on the growth outlook and public finances, with significant social repercussions. These pressures underscore the need to sustain sound policies and the reform momentum, and accelerate domestic revenue mobilization to create room for priority spending, including on social programs. In this context, the authorities’ commitment to expanding social spending in 2026 using domestic resources is a welcome initial effort. To support Somalia’s reform strategy, sustained assistance from development partners is critical.

“Fiscal performance in 2025 remains strong, supported by resilient domestic revenue collection, disciplined spending, and commendable progress in key reforms. The Cabinet-approved 2026 budget aligns with program objectives, envisaging continued domestic revenue mobilization and expenditure restraint while safeguarding priority spending. Key revenue reforms include continuing customs modernization, strengthening the implementation of the Income Tax Law, and further enhancing revenue administration. Further progress in public financial and debt management is crucial, especially as Somalia plans to access external concessional borrowing. The rollout of the Pay and Grade and civil service pension reforms should be consistent with fiscal sustainability.

“The Central Bank of Somalia has continued commendable progress in strengthening institutional framework and regulatory capacity. Efforts to improve financial sector regulations and supervision, promote financial inclusion, and enhance the AML/CFT framework are welcome and should continue. Preparation for the reintroduction of the Somali Shilling and the adoption of a currency board arrangement is also advancing.

“The authorities remain committed to enhancing transparency and accountability in developing the petroleum sector by adhering to the recently completed comprehensive legal framework. Further reforms to improve governance, fight corruption, and enhance climate resilience, are also encouraged.”