Somalia continues to make impressive strides in its reform agenda and economic management, as the International Monetary Fund (IMF) staff and Somali authorities reached a staff-level agreement on the fourth review of the Extended Credit Facility (ECF) arrangement. The agreement highlights Somalia’s dedication to structural reform commitments and sustainable recovery despite ongoing economic challenges.
The announcement followed an IMF mission led by Ran Bi, which held discussions in Mogadishu with Somali officials led by Finance Minister H.E. Bihi Egeh from September 16 to October 8, 2025. The deal remains subject to approval by the IMF Executive Board.
Strengthening Reforms Amid Economic Challenges
Somalia’s economy demonstrated resilience through steady reform implementation and consistent growth. Despite reduced foreign aid and adverse climate shocks, GDP growth for 2025–26 is projected at around 3–3.3%. Inflation remains contained near 3.5%, though food prices remain under pressure.
The government’s structural reform commitments focus on strengthening customs modernization, improving tax collection under the new income tax law, and reinforcing transparency within extractive industries. Fiscal discipline and accountability remain central to these reforms, ensuring that Somalia continues to progress toward economic stability.
“These reforms are vital to sustain growth and build fiscal resilience,” said Ran Bi. “Our collaboration with Somalia supports a more inclusive, transparent, and stable financial framework.”
Expanding Financial Assistance Programs
To mitigate the effects of foreign aid cuts, the Somali government has requested an increase in access to the ECF arrangement by SDR 30 million (about US$40 million), bringing total disbursements under the program to roughly US$100 million. This enhanced support underscores the IMF’s ongoing financial assistance programs aimed at boosting economic stability and protecting vulnerable communities.
The funds will help expand social spending, sustain essential public services, and ensure continued progress in fiscal management. The authorities’ efforts align closely with Somalia’s broader economic development strategies designed to support long-term growth and human capital development.
Building a Foundation for Economic Development
Somalia’s fiscal performance remains strong. Income tax collection has exceeded expectations, and expenditure levels are within program targets. The government aims to maintain a small deficit of 0.3% of GDP for 2025 and around 0.75% for 2026. These efforts demonstrate a disciplined approach toward implementing structural reform commitments while protecting social investments.
Ongoing financial assistance programs from international partners will continue to play a key role in supporting reforms, promoting job creation, and driving Somalia’s recovery under its economic development strategies. The Central Bank of Somalia is also advancing its modernization agenda, strengthening monetary policy, governance, and anti-money laundering frameworks.
Commitment to Transparency and Future Growth
Despite global uncertainty, Somalia’s leadership remains committed to fiscal reform, sustainable growth, and social welfare improvements. The country’s continued progress in structural reform commitments — backed by international financial assistance programs — showcases its determination to achieve a more inclusive and resilient economy.
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This story was first reported by the International Monetary Fund (IMF). Read the full article here.
