A team from the International Monetary Fund (IMF), led by Laura Jaramillo, has completed discussions with Somali authorities regarding the 2024 Article IV consultation. The talks, held in Istanbul and Washington DC, concluded with a staff-level agreement on the second review of the Extended Credit Facility (ECF) arrangement, initially approved by the IMF's Executive Board in December 2023. This agreement awaits further approval from the Executive Board.
Laura Jaramillo stated, "Somalia’s real GDP growth outlook has improved, though challenges and risks remain significant." She noted positive trends in agriculture, exports, and remittances for 2024 and projected their continuation into 2025. As a result, real GDP growth is forecasted to rise to 4 percent for both years. However, inflation is expected to decrease at a slower rate than previously anticipated.
Despite ongoing security challenges, Somalia's government continues its efforts against terrorism and plans for a transition from the African Union Transition Mission to a new force by January 2025. The country's economic outlook faces near-term risks such as climate shocks and regional security issues.
Jaramillo highlighted that Somali authorities are focused on increasing domestic revenue to cover operational expenditures by 2027 while maintaining education and health spending. Fiscal results for 2024 align with expectations, projecting an overall deficit of 0.2 percent of GDP. The draft budget for 2025 anticipates domestic revenues at 3.3 percent of GDP with continued reliance on grant financing.
Efforts toward fiscal reforms are ongoing. Key measures include customs modernization and stronger tax enforcement under the Medium-term Revenue Roadmap. Progress is also being made in public financial management and debt management framework improvements.
The Central Bank of Somalia (CBS) is working on institutional governance and financial sector reforms aimed at promoting financial deepening. These include enhancing legislative frameworks and improving regulatory data quality. Additionally, measures are underway to strengthen anti-money laundering frameworks.
Plans are also set to reintroduce the Somalia Shilling (SOS) alongside a currency board arrangement to aid small transactions and enhance financial inclusion over an estimated period of 18-24 months after prerequisites are met.
Jaramillo emphasized Somalia's commitment to fostering inclusive growth, reducing poverty, improving resilience against climate shocks, and enhancing trade integration with international support remaining crucial due to limited resources.
The IMF mission expressed gratitude towards Somali authorities for constructive discussions during meetings with various ministers and officials from different sectors.