A team from the International Monetary Fund has secured a staff-level agreement with Somali authorities to complete the fourth review under the Extended Credit Facility arrangement. The agreement, pending approval by the IMF's Executive Board, unlocks a portion of additional funding and reaffirms commitments to macroeconomic reform.

The mission, led by IMF representative Ran Bi, conducted talks with Somali officials between 16 September and 8 October, resulting in concurrence on key policy measures and an augmentation request under the ECF to mitigate aid cuts and climate pressures. The arrangement envisages disbursement of SDR 22.5 million in equal tranches at the conclusion of the fourth and fifth reviews, subject to Board endorsement. The overall access under the ECF stands at SDR 75 million.

Somalia's fiscal performance has held broadly in line with programme projections. The government enhanced revenue efforts via implementation of a new income tax law, strengthened tax enforcement, and modernised customs operations. Expenditure was restrained within the limits set by the programme, resulting in a projected fiscal deficit of 0.3 percent of GDP in 2025. For 2026, the draft budget balances continued revenue growth with the need to finance security and election-related outlays, targeting an overall deficit near 0.75 percent of GDP.

On macroeconomic trends, real GDP growth achieved 4.1 percent in 2024 and is forecast to moderate to 3–3.3 percent in 2025–26 amid downward pressures from shrinking external grants and climatic disruption. Inflation is expected to remain anchored near 3.5 percent, but food price inflation will demand close monitoring.

The Somali authorities requested the access augmentation to cushion the impact of fiscal gaps arising from reduced aid flows. The supplementary access would be split equally across the fourth and fifth reviews, effectively raising disbursements under the ECF arrangement toward the US$100 million ceiling.

Institutional reforms will be pivotal going forward. Efforts already underway include strengthening revenue administration, advancing public financial management, reforming debt operations, and improving governance in the extractive sector. On the monetary front, the Central Bank is pursuing capacity enhancement, steps toward currency reform, and continued progress on anti-money laundering and counter-terror financing frameworks.

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