International Monetary Fund, IMF staff on Monday reached a staff-level agreement with Somalia that will allow the release of about $10 million to the East African country, once approved by the board.
IMF mission chief, Laura Jaramillo who spoke to newsmen at the end of the mission said the deal came after an in-person review of Somalia’s Extended Credit Facility in Nairobi, Kenya. She praised authorities for sticking to economic reforms despite a prolonged drought, the impact of Russia’s war in Ukraine, and continued security concerns.
The IMF’s board is expected to review the staff-level agreement in early December, Jaramillo said.
If Somalia continues to make steady progress on reforms, it could reach the completion point of the Heavily Indebted Poor Countries (HIPC) global debt forgiveness process by late 2023, which would allow Somalia to pare its debt to around $550 million from $5.2 billion, Jaramillo said.
“That would be a tremendous milestone,” Laura said, noting it would reduce Somalia’s debt to around 7% of gross domestic product from around 90% now.
It would also open up new sources of financing for Somalia, a big help as the country works to implement development programs and promote growth and employment. One pillar of the country’s economic reforms would be to improve domestic revenue, including by enhancing the collection of sales taxes.
