The Executive Board of the International Monetary Fund (IMF) today completed the first review of the Extended Credit Facility (ECF) arrangement for Somalia. The Board's decision enables the immediate disbursement of SDR 7 million (about US$10 million), bringing Somalia's total disbursements under the arrangement to SDR 257.4 million (about US$365.5 million).
Somalia's ECF arrangement was originally approved by the Executive Board on March 25, 2020 (see Press Release No. 20/105) for SDR 292.4 million (about US$395.5 million or around 179 percent of Somalia's quota). The ECF arrangement aims to support the implementation of the authorities' National Development Plan and anchor reforms between the HIPC Decision and Completion Points.
Following the Executive Board discussion, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, made the following statement:
"Performance under the ECF-supported program has been broadly satisfactory, despite the triple shock of COVID-19, flooding, and desert locusts that has 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.
"The authorities remain steadfast in their commitment to the broader policies and reforms of the program, 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 mobilization and continued control on discretionary operating expenditures, creating scope for spending on priorities identified in the authorities' Ninth National Development Plan (NDP9).
"The authorities' plans to enhance fiscal transparency and accountability, and recent steps to deepen intergovernmental fiscal relations, are welcome. The 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. Advancing the licensing and regulation of mobile money operators is urgent.
"Efforts to strengthen the organizational 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.
"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 program 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 program and the HIPC Initiative."