IMF staff completes deal on fourth review of ECF for Somalia
Mogadishu, Somalia (PANA) - Somali authorities and the International Monetary Fund (IMF) staff have reached a staff-level agreement on the 4th review of Somalia’s Extended Credit Facility (ECF) arrangement.
Somalia’s economy continues to show resilience, despite external headwinds, and the 2025-26 growth is expected to reach 3-3¼ percent, the IMF said.
However, the near-term economic outlook is clouded by foreign aid cuts and adverse climate events, according to a statement issued by the IMF on completion of a staff-level agreement on the fourth review of the ECF.
The Somali authorities requested an augmentation of access under the ECF arrangement to mitigate the negative impact of shocks and support their policy efforts, including expanding social spending.
Advancing reforms along with continued assistance from international partners remains critical to support Somalia’s efforts to secure a more robust and sustainable economic future.
An IMF team, led by Ran Bi, conducted discussions with the Somali authorities, led by Bihi Egeh during 16 September – 8 October, 2025, and reached a staff-level agreement on the fourth review under the ECF arrangement. This agreement is subject to approval of the IMF’s Executive Board.
At the conclusion of the discussions, Ms. Bi announced that the Somali authorities and the IMF team have reached a staff-level agreement on policies to complete the fourth review under the ECF arrangement approved in December 2023 for total access of US$100 million.
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 of about US$40 million), to be disbursed in equal tranches at the conclusion of the 4th and the 5th ECF review, respectively.
The agreement is subject to approval by the IMF’s Executive Board. Board approval would enable access to US$30 million, bringing total disbursements under the arrangement to about US$100 million.
Despite the difficult economic environment, the authorities remain committed to improving domestic revenue and maintaining fiscal discipline. Fiscal outturn in 2025 has been broadly in line with expectations.
In particular, income tax collection has been strong, following the enactment of the new income tax law, and expenditure has remained well within the programme target. An overall deficit of 0.3 percent of GDP is expected for 2025. The preliminary 2026 budget plan envisages continued progress in domestic revenue mobilisation and expenditure discipline while accommodating additional security and election-related spending.
Fiscal structural reforms have progressed steadily. Key domestic revenue reforms include the ongoing customs modernisation and enforcement, implementation of the new income tax law, and improving enforcement of sales and income tax collection. Debt and public financial management should continue to strengthen. The authorities are also building capacity to implement the recently completed legal framework to ensure transparency and accountability in the extractive industries.
The Central Bank of Somalia (CBS) has continued to strengthen its institutional capacity and regulatory framework, promote financial deepening and advance the preparation for the currency exchange and the currency board arrangement.
Continued assistance from multilateral and bilateral partners remains crucial to support the authorities’ policy efforts, especially in light of the high uncertainty and significant downside risks.
-0- PANA AR/MA 13Oct2025
