IMF: Near-Term Challenges Weigh On Somalia's GDP

(MENAFN- Brazil-Arab News Agency (ANBA)) São Paulo – Somalia's economy is expected to grow 2.3% this year, according to estimates released Monday (5) by the International Monetary Fund (IMF ), but the North African country faces challenges that threaten its growth. An IMF delegation led by Ran Bi, deputy division chief of the Middle East and Central Asia Department, met with Somali officials in Nairobi, Kenya, from Sept. 21 to Oct. 1.

According to the IMF's country report, Somalia has faced“significant” challenges in recent months, including cuts in external aid, severe and recurring climate shocks, and spillover effects from the conflict in the Middle East. Economic growth is expected to reach 2.3% this year, 2.7% next year and 4% over the medium term. Inflation is projected to reach 6.5% in 2026 due to prolonged drought and trade disruptions.

“Near-term risks are high, including from more severe climate shocks, renewed regional conflict, further aid retrenchment, and domestic challenges. Sustained donor support is critical, especially if downside risks materialize,” the IMF report said.

The IMF said Somalia needs to continue with structural economic reforms, maintain fiscal discipline and contain its deficit. In 2027, the financial institution said, local authorities will need to increase revenue collection and cut spending, even as security spending needs are expected to rise.

The IMF also said fiscal reforms are progressing, with stronger customs enforcement, income tax collection and non-tax revenues. According to the fund, efforts are underway to improve debt management and transparency.

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Translated by Guilherme Miranda

©Abuukar Mohamed Muhidin/Anadolu via AFP

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