MOGADISHU, Somalia – Somalia has continued to advance its reform agenda and program performance has been strong. A staff-level agreement was reached on the 1st review of Somalia’s Extended Credit Facility (ECF) arrangement.
On the back of these efforts, the economy continues to strengthen. Real GDP growth is expected to rise to 3.7 percent in 2024 compared to 2.8 percent in 2023, supported by continued recovery in agriculture, greater remittances, and higher investment.
However, the challenges ahead are still significant, and continued support from international partners is crucial to support the authorities’ policy efforts.
Washington, DC: An International Monetary Fund (IMF) team, led by Laura Jaramillo, conducted discussions with the Somali authorities in Nairobi from February 26 to March 7, 2024, and reached a staff-level agreement on the first review under the Extended Credit Facility (ECF) arrangement. This agreement is subject to the approval of the IMF’s Executive Board.
After the discussions, Ms. Jaramillo issued the following statement:
“I am pleased to announce that the Somali authorities and the IMF team have reached a staff-level agreement on policies to complete the first review under the ECF arrangement approved in December 2023 for total access of SDR 75 million (about US$100 million) (Press Release No. 23/463). The agreement is subject to approval by the IMF’s Executive Board. Board approval would enable access to SDR 7.5 million (about US$10 million), bringing total disbursements under the arrangement to about US$50 million.
Growth is expected to strengthen in 2024 supported by continued recovery in agriculture, remittances, and investment, though risks remain. Real GDP growth is forecast at 3.7 percent in 2024, compared to an estimated 2.8 percent in 2023. Livestock and crop exports are expected to recover following the resumption of rainfall.
Remittance inflows are expected to improve in the context of moderating global inflation and an upgrade of the global growth outlook. Foreign direct investment is expected to trend upwards, following US$4.5 billion in debt relief obtained at the Completion Point under the Heavily Indebted Poor Countries (HIPC) Initiative in December 2023 (Press Release No. 23/438). Inflation is expected to decline to 4.8 percent in 2024 from 6.1 percent in 2023, reflecting better crop yields and lower commodity prices. Near-term risks include climate shocks, security risks in Somalia and the region, and lower global growth.
Source: IMF
