IMF approves $100M under new ECF arrangement for Somalia

On December 19, 2023, the Executive Board of the International Monetary Fund (IMF) approved a new 3-year arrangement under the Extended Credit Facility (ECF) for Somalia in the amount of SDR 75 million (about 45.9 percent of the quota, or about $100 million), Report informs, citing the IMF.

Approval of the ECF arrangement enables the immediate disbursement of SDR 30 million for budget support (about US$40 million).

Achievement of the HIPC Completion Point and completion of the 2020 ECF is a testament to the Somali authorities’ sustained track record of reform implementation over the past years, despite numerous challenges. Through these efforts, Somalia has made considerable progress in strengthening key economic and financial institutions as well as improving governance.

However, despite the progress achieved, Somalia faces significant challenges, including those stemming from economic, social, security, and climate risks. In 2022, an estimated 54 percent of the population was living on less than $2 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 are embarking on a new 3-year IMF-supported program. The program will support the authorities’ post-HIPC reform strategy to 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. Reform implementation will be accompanied by extensive IMF capacity development assistance, supported by the Somalia Country Fund.