IMF – the International Monetary Fund has granted the Somalian Government the access to tap into external lenders as long as the government accepts to continue with government reforms that include domestic revenue mobilization, strengthening public financial management, deepening of CBS capacity, and enhancing governance.
In a press release from its website, the IMF stated that its Executive Board has completed the second and third reviews of the Extended Credit Facility (ECF) arrangement for Somalia and that its board had reached a decision for the immediate disbursement of SDR 14 million (about US$ 18.8 million), bringing Somalia’s total disbursement under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) to SDR 271.4 million (about US$ 384.3 million).
Following the Executive Board discussion, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, made the following statement:
“The Somali authorities have preserved macroeconomic stability and maintained the reform momentum, notwithstanding multiple shocks. In addition to the challenges from Covid-19 and the protracted elections process, food security and economic activity are under strain because of severe drought conditions, compounded by rising global food and energy prices. The authorities’ have made skillful efforts to navigate these challenges, supported by the international community, including the 2021 General SDR allocation.
“The authorities maintain a steadfast commitment to the reform agenda under the ECF-supported program and the HIPC process, which is critical to build resilience, promote inclusive growth, and reduce poverty. The authorities’ ongoing efforts to strengthen domestic revenue mobilization and public financial management are commendable. Continued improvements in the institutional capacity of the Central Bank of Somalia are welcome. It will be important to continue to advance reforms to improve AML/CFT and governance. Sustained efforts are needed to finalize the HIPC completion point triggers and achieve debt relief agreements with all creditors.
“Support from development partners, both on financing and capacity development, is important for the successful implementation of the authorities’ reform strategy. 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 ECF-supported program and the HIPC Initiative.” The statement said.
Somalia’s ECF arrangement was originally approved by the Executive Board on March 25, 2020, as part of a three-year blended arrangement under the ECF and the EFF, which involved access of SDR 252.86 million (155 percent of quota) under the ECF and SDR 39.57 million (24 percent of quota) under the EFF. As the full amount of the EFF arrangement was made available on approval and drawn at the first purchase, the EFF arrangement lapsed immediately. The ECF arrangement supports the implementation of the authorities’ National Development Plan and anchors reforms between the HIPC Decision and Completion Points.
The IMF actions are regarded as the necessary steps for Somalia to begin receiving debt relief, and a key move that will allow the Horn of Africa country to lower its $5.2 billion in external debt to around $557 million.
Somalia, with a population of 15 million, is the 37th country to reach this “Decision Point” under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
