Somalia has advanced economically with a recent IMF staff-level agreement regarding the second review of the Extended Credit Facility (ECF). This agreement, reached in Istanbul and Washington, D.C., forms part of the IMF’s 2024 Article IV consultation, signaling positive growth alongside cautious optimism.
IMF mission chief Laura Jaramillo noted an improved economic outlook, with Somalia’s GDP expected to rise by 4% in both 2024 and 2025. This growth is supported by gains in agriculture and a steady inflow of remittances. While encouraging, Jaramillo cautioned against several risks, particularly climate change, regional security, and global economic shifts, that could disrupt this progress.
On the fiscal side, Somalia’s performance has been steady, with a 2024 deficit of only 0.2% of GDP and a 2025 target of 3.3% GDP in domestic revenue. Future plans include funding all government operations domestically by 2027, anchored by a new Medium-term Revenue Roadmap focused on modernized customs and tax reforms.
Key improvements in public financial management, payroll transparency, and debt oversight have bolstered fiscal reliability. The IMF has also commended the Central Bank of Somalia (CBS) for pushing forward financial sector reforms, targeting better governance and improved anti-money laundering standards.
One of the most significant milestones is the planned reintroduction of the Somali Shilling (SOS), a move designed to aid small-scale transactions and improve financial access, particularly for underserved populations. This major effort, expected to take up to two years, relies on external support and a currency board arrangement aimed at stabilizing the SOS.
Somalia’s policy priorities include poverty reduction, greater education access, and enhanced food security, aligning with broader goals of inclusive economic development. Joining the East African Community is also on the horizon, with Somalia focusing on a gradual integration to weigh benefits and challenges.
Somalia’s path forward remains sensitive to a range of risks, with security and environmental issues requiring continued international support for both financial and technical resilience.
