By Malay Mail
International Monetary Fund (IMF) staff yesterday reached a staff-level agreement with Somalia that will allow the release of about US$10 million (RM47 million) to the East African country, once approved by the board, the head of the IMF mission told Reuters.
IMF mission chief Laura Jaramillo said the deal came after an in-person review of Somalia’s Extended Credit Facility in Nairobi, Kenya. She praised authorities for sticking to economic reforms despite a prolonged drought, the impact of Russia’s war in Ukraine and continued security concerns.
Read: Somalia’s president Hassan Sheikh history of corruption 2012-2017
Read: Somalia’s president Hassan Sheikh history of corruption 2012-2017
The IMF’s board is expected to review the staff-level agreement in early December, Jaramillo said.
If Somalia continues to make steady progress on reforms, it could reach the completion point of the Heavily Indebted Poor Countries (HIPC) global debt forgiveness process by late 2023, which would allow Somalia to pare its debt to around US$550 million from US$5.2 billion, Jaramillo said.
“That would be a tremendous milestone,” she said, noting it would reduce Somalia’s debt to around 7 per cent of gross domestic product from around 90 per cent now.
It would also open up new sources of financing for Somalia, a big help as the country works to implement development programs and promote growth and employment. One pillar of the country’s economic reforms would be to improve domestic revenue, including through enhancing collection of sales taxes.
The IMF said Somalia still needed continued and immediate support from international partners given the current severe food crisis, but also needed to work on building longer-term resilience to climate shocks.
Somalia’s outlook remained clouded, with GDP growth for 2022 projected at 1.9 per cent, down from 2.9 per cent in 2021, and inflation projected to reach 9 per cent from 4.6 per cent in 2021, the IMF said.
Near-term risks were elevated, including a worsening of the food crisis that already has 4.3 million people facing acute food insecurity, if healthy rains do not resume in 2022 or if commodity prices rise further, it said. ― Reuters