Somalia, 14 October 2025 - Somalia is seeking $40 million from the International Monetary Fund (IMF) to address budgetary shortfalls as demand for services and development projects continues to rise across the country.
The Federal Government has sought an increase of 30 million Special Drawing Rights (SDR) (approximately US$40 million) under Somalia’s Extended Credit Facility (ECF).
The request is part of ongoing efforts to protect the economy from the impacts of sharp reductions in foreign aid and worsening climate-related shocks.
An agreement between the IMF and the government regarding the fourth review of Somalia’s ECF arrangement has been reached following discussions held from September 16 to October 8, this year. The agreement is subject to approval by the IMF’s executive board. If approved, the additional funding will be disbursed in two equal tranches.
“I am pleased to announce 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 SDR 75 million (about US$100 million),” said IMF Mission Chief Ran Bi at the conclusion of the mission.
“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 SDR 30 million (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,” he added.
Approval of the current review would unlock SDR 22.5 million (about US$30 million), bringing Somalia’s total disbursements under the three-year arrangement to nearly US$100 million since it was launched in December 2023.
The ECF was designed to support Somalia’s economic reform program by promoting fiscal discipline, modernizing public institutions, and building economic resilience following the country’s debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.
Somalia’s economy showed resilience in 2024, with real Gross Domestic Product (GDP) growth reaching 4.1 per cent. However, the outlook for 2025 and 2026 has weakened.
Growth is projected at 3 per cent in 2025 and 3.3 per cent in 2026, influenced by declining aid flows and adverse weather conditions.
Inflation is expected to remain steady at around 3.5 per cent, but food prices are anticipated to remain elevated. According to the IMF, downside risks continue to dominate the near-term outlook, with the potential for further deterioration if aid disruptions and climate shocks persist.
Despite these pressures, the Somali authorities have maintained a strong commitment to fiscal discipline and domestic revenue generation.
Fiscal performance in 2025 has remained broadly on track with significant revenue gains from income tax, following the introduction of the new income tax law. Government expenditure has remained within program limits, and the overall fiscal deficit for 2025 is expected to be just 0.3 per cent of GDP.
Looking ahead to 2026, the preliminary budget continues to prioritize revenue mobilization and controlled spending while accommodating additional needs for security and elections. Importantly, it also allocates resources for expanding social spending, aimed at cushioning vulnerable groups from the social impacts of reduced foreign aid. Under these plans, the overall deficit for 2026 is projected at approximately 0.75 per cent of GDP.
Somalia has also made steady progress on broader structural reforms. Key areas of progress include the ongoing modernization of customs systems, improved enforcement of sales and income tax collection, and the continued strengthening of debt and public financial management.
Authorities are working to implement a newly completed legal framework to improve transparency and accountability in the extractive industries sector.
The Central Bank of Somalia (CBS) has taken significant steps to enhance its institutional capacity and regulatory oversight. These efforts include preparations for a currency exchange and the introduction of a currency board arrangement. Additionally, the authorities have also made advances in strengthening the anti-money laundering and counter-terrorism financing (AML/CFT) framework and enhancing governance across financial institutions.
While acknowledging Somalia’s reform progress, the IMF underscored the importance of continued international support.
“Somalia has maintained strong reform implementation and program performance, despite a challenging environment,” said Ran Bi. “The authorities’ commitment to sound policies and continued international support remains essential for building a more resilient and inclusive economy.”
The IMF mission thanked the Somali authorities for their cooperation throughout the review process. Meetings were held with the Minister of Finance, the Governor of the Central Bank, senior government officials, development partners, and private sector representatives.