(Ecofin Agency) - Despite the drought and difficult security situation, Somalia has continued the implementation of reforms under its Extended Credit Facility (ECF) program. Based on its progress in the implementation of those reforms, the IMF has reached a staff-level agreement on the fifth review of that agreement.
The International Monetary Fund (IMF) commends the reforms undertaken by Somalia despite its unfavorable economic environment. The commendation was published by the monetary institution on Monday, March 20.
The Somali government's efforts to improve the country's financial sector seem to be progressing in the right direction. Based on all of the progress observed, after the fifth review of the Extended Credit Facility (ECF), the IMF has decided to support the efforts.
“Somalia has maintained strong reform momentum and program performance has been satisfactory. A staff-level agreement was reached on the fifth review of Somalia’s Extended Credit Facility (ECF) arrangement,” the IMF indicates.
In the country, some areas still face acute food insecurity due to drought. Nearly 7.3 million people have received humanitarian assistance. “Nonetheless, half of the population would face acute food insecurity by June 2023 if the April-June rainy season disappoints and financing of humanitarian support is not adequate.”
Somalia's economic activity has been impacted by the drought as well as by the slowdown in global growth. As a result, the UN has revised its 2022 GDP growth downward to 1.7 percent from 1.9 percent. It also revised the 2023 growth forecast to 2.8 percent, from 3.1 percent. Average inflation has risen to 6.8 percent in 2022 due to higher food and fuel prices and is expected to decline to 4.2 percent in 2023 as commodity prices fall.