The International Monetary Fund (IMF) has issued its report on the conclusion of the fourth review under the second phase of Somalia’s Extended Credit Facility (ECF) arrangement.
The International Monetary Fund (IMF) has provided an optimistic assessment of Somalia’s economic prospects, upgrading the country’s real GDP growth forecast to 4 percent for both 2024 and 2025, while acknowledging significant challenges that remain. As the IMF said in a press release on its website
In a recent staff-level agreement following Article IV consultations, the IMF praised Somalia’s commitment to macroeconomic stability and institutional strengthening. Led by Ms. Laura Jaramillo, the IMF mission highlighted several key developments and ongoing reforms across multiple sectors.
The upgraded growth projection is primarily driven by strong exports and remittances. However, the country faces elevated risks, including potential security challenges, commodity price fluctuations, and climate shocks. Inflation is expected to continue its downward trend, projected to reach 4.5 percent by the end of 2024.
Somalia is making steady progress in fiscal reforms, with a strategic focus on raising domestic revenue. The government aims to fully cover operational expenditures with domestic revenues by 2027. Key revenue measures include:
- Customs modernization
- Introduction of a new income tax law
- Stronger enforcement of sales and income taxes
The 2025 draft budget anticipates domestic revenues of 3.3 percent of GDP and maintains a modest fiscal deficit of 0.2 percent.
Given Somalia’s limited resources, the IMF emphasized the crucial role of international financing and technical assistance in supporting these reform efforts.
The country is also carefully navigating its integration into the East African Community, recognizing both the opportunities and potential challenges this presents.
The IMF mission expressed appreciation for the constructive discussions with Somali authorities and various stakeholders, signaling continued collaborative engagement in supporting Somalia’s economic development.
