Nairobi, SONNA – The Federal Government of Somalia and the International Monetary Fund (IMF) have reached an agreement on a 36-month staff-level program aimed at enhancing the country’s financial system and promoting economic recovery, following the successful achievement of debt relief.
The agreement was announced in a report released by the IMF on November 01, 2023, which praised the progress made by the Somali authorities in implementing financial reforms and improving governance.
Somalia had successfully completed the ninth and final review under the Extended Credit Facility (ECF) arrangement, which paved the way for Somalia to reach the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative in December 2023.
The completion point will mark the end of a long process of debt relief for Somalia, which has been burdened by an unsustainable external debt of about $5.3 billion since the collapse of the central government in 1991.
The new ECF program, which will start after the completion point, aims to guide the policies for the post-debt relief period, to further strengthen the financial institutions, support small businesses and foster inclusive economic growth in line with the National Development Plan and the long-term vision of the Somali government.
The IMF said that the new program will focus on maintaining macroeconomic stability, enhancing revenue mobilization and public financial management, improving financial sector supervision and regulation, promoting financial inclusion and access to credit, and advancing structural reforms to improve governance and transparency.
The IMF also said that continued support from international partners is essential for Somalia to achieve its development goals and overcome the challenges posed by the COVID-19 pandemic, climate shocks, insecurity and humanitarian crises.
The Minister of Finance of the Federal Government of Somalia, Mr. Bihi Iman Egeh, welcomed the new agreement and said that it will facilitate the continuation of financial rehabilitation activities after the end of the debt relief program.
He said that after more than 30 years, Somalia will be dealing face to face with the international financial institutions and will have access to concessional financing and grants to support its development agenda.
He also thanked the IMF and other partners for their unwavering support and cooperation with Somalia throughout the debt relief process.
