Monday October 13, 2025
Mogadishu (HOL) — The International Monetary Fund (IMF) and the Somali government have reached a staff-level agreement on the fourth review of Somalia’s Extended Credit Facility (ECF), a deal that could release US$30 million in new funding to support reforms and stabilize the nation’s fragile economy.
The agreement, announced Sunday, follows two weeks of discussions led by IMF Mission Chief Ran Bi and Finance Minister Bihi Egeh in Washington, D.C., and Mogadishu. It will be submitted to the IMF Executive Board for approval in the coming weeks.
If approved, the disbursement will bring Somalia’s total ECF funding to nearly US$100 million since the program began in December 2023, as part of a three-year arrangement designed to strengthen fiscal discipline, modernize public institutions, and sustain growth after years of debt relief.
Somalia’s economy, which grew 4.1 percent in 2024, is expected to slow to 3 percent in 2025 and 3.3 percent in 2026 due to foreign aid cuts and recurring climate shocks, according to IMF projections. Inflation is forecast to remain stable at 3.5 percent, though food prices are likely to remain high.
Despite these challenges, the IMF noted that Somalia’s fiscal performance has stayed broadly on track. The country’s budget deficit is projected at 0.3 percent of GDP in 2025, rising slightly to 0.75 percent in 2026 as the government expands social spending and prepares for national elections.
Authorities have requested an augmentation of access under the current ECF by SDR 30 million (about US$40 million) to cushion against aid disruptions and fund social programs.
The IMF commended Somalia’s continued reform drive, highlighting strong income tax collection under a new tax law, customs modernization, and strict control over spending.
The Central Bank of Somalia has strengthened its regulatory framework and advanced plans for a future currency board arrangement that would stabilize the Somali shilling. The government has also implemented a new extractive industries law to increase transparency in resource management and attract investment in oil and gas.
“To mitigate the negative impact of foreign aid cuts and support their reform efforts, the authorities have requested an augmentation of access under the ECF arrangement,” said IMF Mission Chief Ran Bi, praising the Somali government’s commitment to reform despite economic challenges.
The ECF program builds on Somalia’s historic debt relief milestone in 2023, when 99 percent of its bilateral debt was cancelled by Paris Club creditors under the Heavily Indebted Poor Countries (HIPC) initiative. The move allowed Somalia to regain access to global financial markets for the first time in three decades.
Continued international support, the IMF said, remains crucial to maintain momentum amid uncertainty surrounding aid flows and worsening climate shocks.
If the Executive Board approves the latest review, Somalia will gain access to the next tranche of financing before the end of the year.