Somalia Eyes Full Debt Relief

The International Monetary Fund is encouraged and satisfied with Somalia’s economic reforms. The robust reforms may aid the country in debt forgiveness. 

The financial agency, which promotes global economic growth and financial stability, reached a staff-level agreement with Somali officials in Nairobi on Monday for the release of $10 million, which is pending approval by the board.

The financial agreement was reached following a review of Somalia’s Extended Credit Facility.

Despite the prolonged drought, the impact of Russia’s war in Ukraine, and ongoing insecurity, IMF mission Chief Laura Jaramillo praised Somalia for sticking to economic reforms.

“Timely financing and capacity development support from development partners is essential for the successful implementation of the authorities’ reform strategy, said Jaramillo. “Contributions from Somalia’s partners to the Somalia Country Fund are also needed to ensure smooth delivery of IMF technical assistance to support the goals of the Extended Credit Facility-supported program and the Highly Indebted Poor Countries Initiative.”

Continued Somali economic reforms and good financial management track record will help the country qualify for full debt relief next year. 

Somalia’s minister for finance Elmi Mohamud Nur said his country is committed to continuing and implementing economic reforms.

“We are making progress despite the global challenges; economic slowdown, rising inflation and food prices,” he said.

In recent years, the Horn of Africa nation has implemented fiscal reforms such as increased revenue collection, tax law and customs liberalization.

The country has also improved its financial management systems through fiscal reporting, procurement, and non-financial asset management.

“The Central Bank of Somalia is advancing institutional and financial sector reforms. The CBS will continue to enhance the regulatory framework and strengthen its supervisory capacity. Further action is needed to address money laundering and financing of terrorism risks,” Jaramillo said.

IMF said Somalia’s GDP growth is expected to be 1.9%. Drought and higher commodity prices will drive inflation to 9%.