Washington, October 18 (BNA): International Monetary Fund staff reached on Monday a staff-level agreement with Somalia that allows the release of about $10 million for the East African country, once the Board of Directors approves it. The International Monetary Fund mission told Reuters.
The IMF mission chief, Laura Jaramillo, said the deal came after a personal review of the Somalia Extended Credit Facility in Nairobi, Kenya.
She commended the authorities for their commitment to economic reforms despite a prolonged drought, the impact of the Russo-Ukrainian war, and continuing security concerns.
Jaramillo said the IMF board was expected to review the staff-level agreement in early December.
If Somalia continues to make steady progress on reforms, it could reach the completion point of the Global Heavily Indebted Poor Countries (HIPC) process by late 2023, which would allow Somalia to reduce its debt to about $550 million from $5.2 billion, Jaramillo said.
“That would be a huge milestone,” she said, noting that it would reduce Somalia’s debt to around 7% of GDP from around 90% now.
It will also open up new sources of finance for Somalia, a huge help as the country works to implement development programs and boost growth and employment. One of the pillars of the country’s economic reforms is the improvement of local revenue, including through enhanced sales tax collection.
The IMF said Somalia still needs continuous and immediate support from international partners given the current severe food crisis, but it also needs to work on building long-term resilience in the face of climate shocks.
EAE