Press Release No. 23/437

IMF Executive Board Concludes the Sixth Review of the Extended Credit Facility for Somalia

December 13, 2023

• Somalia has maintained strong reform momentum and program performance has been satisfactory. The IMF Executive Board completed the sixth and final review under Somalia’s Extended Credit Facility (ECF) arrangement.
• The successful completion of the ECF program facilitated reaching the Heavily Indebted Poor Countries (HIPC) Completion Point, which provided total debt service savings for the country of US$4.5 billion.
• The IMF Board also considered a new 36-month Extended Credit Facility arrangement of SDR 75 million (about US$100 million). The new program aims to further advance reforms that strengthen vital economic institutions and foster inclusive and sustainable growth.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the sixth and final review of the Extended Credit Facility (ECF) arrangement for Somalia. The Board’s decision enables the immediate disbursement of SDR 7 million (about US$ 9.3 million), bringing Somalia’s total disbursement under the ECF and the Extended Fund Facility (EFF) approved in 2020 to SDR 292.43 million (about US$ 388.7 million). The Executive Board of the IMF, as well as the Executive Board of the World Bank’s International Development Association (IDA), also approved the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point for Somalia, which provides total debt service savings for the country of US$4.5 billion (see Press Release No. 23/438). The IMF Executive Board also considered a new 3-year arrangement under the ECF for Somalia in an amount of SDR 75 million (about 45.9 percent of quota, about US$100 million). Because a member cannot have two ECF arrangements effective at the same time under the PRGT instrument, the new ECF would only come into effect once the current ECF expires.

Somalia’s ECF arrangement was originally approved by the Executive Board on March 25, 2020 (see Press Release No. 20/105 ) as part of a three-year blended arrangement under the ECF and the EFF, which involved access of SDR 252.86 million (155 percent of quota) under the ECF and SDR 39.57 million (24 percent of quota) under the EFF. As the full amount of the EFF arrangement was made available on approval and drawn at the first purchase, the EFF arrangement lapsed immediately. Once the 6^th review related disbursement is completed, the ECF arrangement will expire.

Following the Executive Board discussion, Ms. Antoinette Sayeh, Deputy Managing Director, and Acting Chair, made the following statement:

"The authorities’ strong commitment and successful implementation of reforms to rebuild Somalia’s economy and institutions, including the completion of the program supported by the Extended Credit Facility (ECF), have led to Somalia reaching the completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The sizeable debt relief provided to Somalia will reduce the country’s external debt repayments to sustainable levels and open the way for access to new external financing to support inclusive growth and poverty reduction.

"The authorities remain firmly committed to continuing their efforts to address the challenges that Somalia still faces, including those stemming from economic, social, security, and climate risks. To this end, a new ECF arrangement will support the authorities’ economic policy efforts post-HIPC to build resilience, promote inclusive growth, and reduce poverty.

"Fiscal policy will be guided by a prudent framework that balances the need for higher development expenditure with protecting fiscal sustainability, and taking into account capacity constraints. The authorities’ ongoing efforts to strengthen domestic revenue mobilization, public financial management, and debt management are commendable. Continued improvements in the institutional capacity of the Central Bank of Somalia are welcome, including in the context of the currency reform. It will also be important to continue to advance reforms to improve AML/CFT and governance.

"Maintaining the authorities’ strong ownership of the reform agenda will be important for its successful implementation. Continued support from development partners, including from partners for the Somalia Country Fund, and sustained IMF CD assistance are also essential."