IMF Staff Completes Staff-Level Agreement on the Fifth Review of the Extended Credit Facility Arrangement for Somalia

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IMF Staff Completes Staff-Level Agreement on the Fifth Review of the Extended Credit Facility Arrangement for Somalia

An International Monetary Fund (IMF) team, led by Laura Jaramillo, conducted discussions with the Somali authorities in Nairobi on March 7-14, 2023 and reached a staff-level agreement on the fifth review under the Extended Credit Facility (ECF) arrangement. This agreement is subject to approval...

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https://www.garoweonline.com/en/news/somalia/imf-somalia-almost-achieving-debt-relief

The Federal Government of Somalia has made tremendous progress in its bid to achieve debt relief, the International Monetary Fund [IMF] has said, noting that the Horn of Africa nation has reached a staff-level agreement for the fifth review of Somalia's Extended Credit Facility [ECF] arrangement.

Laura Jaramillo, the IMF chief, said the country has made huge progress despite an acute shortage of food and drought which has ravaged the country for over three years. The country, she said, is swiftly moving towards the HIPC Completion Point which could be achieved by the end of 2023.

Despite the encouraging news, Somalia's estimated GDP growth diminished by 1.7 percent due to drought and subsequent reduction in remittances. The high cost of food and fuel, IMF noted, led to inflation which hit 6. 8 percent in 2022 but is expected to reduce to 4.2 percent in 2023.

The IMF expects external budget support to remain crucial, even though Somali authorities have committed to improving revenue collection in 2023. The IMF expressed satisfaction with the continued fiscal reforms, including the new income tax law and increasing revenue collection from large businesses, especially the telecom sector.

On a positive note, public financial management has been strengthened, and improvements are ongoing in integrating all employees in the payroll system, fiscal reporting, procurement, and management of non-financial assets. This, IMF says, would reduce wage bills by eradicating several ghost workers.