Somalia and IMF Reach Preliminary Agreement on $100 Million in New Funding, Reports Reuters

NAIROBI – Staff members from the International Monetary Fund (IMF) announced on Wednesday that they have reached a preliminary agreement with Somalia, paving the way for the release of $100 million in funding through a new 36-month credit program.

This staff-level agreement, established under the Extended Credit Facility (ECF), is pending approval from the IMF’s board. The funding aims to assist Somalia’s economic institutions in formulating policies in preparation for the potential debt relief under the Heavily Indebted Poor Countries Completion scheme, which is targeted for December.

Laura Jaramillo, who led the review team on Somalia, emphasized that despite this progress, the country still confronts significant challenges. These include economic, social, security, and climate-related risks.

"Currently, economic growth is not sufficient to alleviate widespread poverty, meet considerable social needs, and create enough job opportunities for the youth," Jaramillo stated. "Somalia remains highly susceptible to climate shocks that can adversely impact growth and hinder poverty reduction efforts."

Somalia’s government has been engaged in a prolonged struggle against the al Shabaab group, which is linked to al Qaeda and has operated in the region since 2006. This militant group aims to overthrow the government and has carried out numerous gun and bomb attacks, targeting both the government forces and peacekeeping troops.

Additionally, the country has faced recurring droughts and floods over the years, displacing thousands of people and adding to the ongoing humanitarian challenges.