IMF completes fourth review of the financial assistance arrangement for Somalia
The Executive Board of the International Monetary Fund (IMF) has completed the fourth review of the Extended Credit Facility (ECF) arrangement for Somalia.
The Board’s decision enables the immediate disbursement of about US$ 8.9 million, bringing Somalia’s total disbursement under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) to about US$ 393.2 million.
Somalia’s Extended Credit Facility arrangement was originally approved by the Executive Board on March 25, 2020 as part of a three-year blended arrangement.
The International Monetary Fund welcomed the Somali authorities’ commitment to economic reforms and the HIPC process, notwithstanding the challenges arising from an acute food crisis.
It has called for continued efforts by the authorities and sustained support from international partners to address the humanitarian crisis and reduce climate vulnerability to prevent food crises in the future.
The agency positively noted that performance under the program has been strong and commended the authorities’ steady progress under the HIPC process that is laying the ground for the Completion Point to be achieved in late 2023.
They encouraged the authorities to continue with the timely implementation of finalizing debt relief agreements with all creditors.
IMF has praised the implementation of reforms to raise domestic revenues and called for further efforts on tax policy and administration reforms, including customs modernization and the new income tax law.
The organization in statement commended the improvement in public financial management and encouraged further progress on payroll integration and fiscal transparency.
“Such efforts are needed to ensure medium-term fiscal sustainability given Somalia’s very low tax ratio amid large development needs, and the expected shift to concessional financing at the Completion Point,” the statement read.
Continued reforms to strengthen the central bank’s governance and legal frameworks, including implementation of IMF Safeguards recommendations have been commended.
The committee recommended further bolstering the central bank’s financial regulation and supervision capacity.
Reforms aimed at building resilience to climate shocks, advancing implementation of the national development plan, and promoting financial deepening and inclusion, while maintaining fiscal sustainability have also been fronted by the reviewing directors.
The Directors noted that support from development partners is important for the successful implementation of the authorities’ reform strategy, including continued IMF support and financing from partners for the Somalia Country Fund.
Somalia is hopeful to have all its debts relived