The Executive Board of the International Monetary Fund (IMF) on Wednesday completed the first review of the Extended Credit Facility (ECF) arrangement for Somalia, enabling the immediate disbursement of US$10 million to support its National Development Plan.
The credit brings Somalia’s total disbursements under the arrangement to US$365.5 million, according to a press statement issued by the IMF on Thursday.
Somalia’s ECF arrangement was originally approved by the Executive Board on 25 March, 2020 for US$395.5 million, aiming to the implementation of the National Development Plan and anchor reforms between the HIPC Decision and Completion Points.
Following the Board’s discussion, Ms. Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair, stated that performance under the ECF-supported programme has been broadly satisfactory, despite the triple shock of COVID-19, flooding, and desert locusts that hit Somalia.
“The authorities have taken swift and appropriate actions, supported by the international community, to mitigate the effects of these shocks, including the provision of temporary tax relief on basic food commodities, expanding the social safety net, and providing credit to micro-, small-and-medium-sized enterprises,” Ms. Sayeh said.
She pointed out that the authorities in Somalia remain steadfast in their commitment to the broader policies and reforms of the programme, which are critical to increase inclusive growth and reduce poverty over the longer term.
“The implementation of the proposed 2021 budget will underpin greater domestic revenue mobilisation and continued control on discretionary operating expenditures, creating scope for spending on priorities identified in the authorities’ Ninth National Development Plan,” Ms. Sayeh said.
The IMF Executive Board welcomed plans by the authorities in Somalia to enhance fiscal transparency and accountability, and recent steps to deepen intergovernmental fiscal relations.
Their commitment to improving governance and fighting corruption is also encouraging, as are the planned steps to increase transparency and accountability in the licensing framework for the telecommunications sector, the Board said, underlining the urgency of advancing the licensing and regulation of mobile money operators.
“Efforts to strengthen the organisational capacity of the central bank are commendable. Continued capacity building across all stakeholders is needed to improve AML/CFT compliance, and the national risk assessment should be completed as quickly as possible,” said Ms. Sayeh.
“Sustained efforts to reach agreement with external creditors on debt relief consistent with the HIPC framework, together with steps to strengthen debt management capacity, are needed to safeguard debt sustainability.
“Continued capacity building will be needed to support the successful completion of the ECF-supported programme and reach the HIPC completion point. Support from Somalia’s partners for the Somalia Trust Fund will be needed to ensure a continued smooth delivery of IMF technical assistance to support the goals of the ECF-supported
programme and the HIPC Initiative,” she added. (PANA/NAN)