IMF Approves $40 Million Boost for Somalia’s Credit Program, Fourth Review Cleared

IMF approves additional $40 million for Somalia, releases $30 million in immediate budget support

MOGADISHU — The International Monetary Fund has approved an additional $40 million for Somalia after completing the fourth review of the country’s Extended Credit Facility, authorizing an immediate $30 million disbursement for budget support. The decision lifts Somalia’s total access under the program to about $140 million and brings cumulative disbursements to roughly $100 million under the arrangement approved in December 2023.

The IMF said Somalia continues to meet reform commitments despite a sharp fall in foreign aid, recurrent climate shocks and a tough global backdrop that has strained growth and public finances. Authorities plan to expand social spending in 2026 using domestic resources for the first time to help offset shrinking donor support.

Fiscal performance in 2025 remained strong, according to the Fund. Domestic revenue held steady, expenditures were kept in check and key structural reforms advanced. A Cabinet-approved 2026 budget targets higher domestic revenue, prudent spending and protection of priority social programs.

In its assessment, the IMF highlighted progress and priorities in Somalia’s economic reform agenda:

• Customs modernization to boost and stabilize trade-related revenues.
• Enforcement of the Income Tax Law and stronger revenue administration.
• Strengthening public financial management and debt management as Somalia prepares to access concessional external loans.
• Aligning pay-and-grade and pension reforms with long-term fiscal sustainability.

“The Somali authorities have maintained steadfast implementation despite domestic and global challenges,” IMF Deputy Managing Director Nigel Clarke said. “Declining foreign aid, recurrent climate shocks and heightened uncertainty underscore the need for strong policies and faster domestic revenue mobilization. The commitment to expand social spending using domestic resources in 2026 is a welcome step.”

Clarke said continued support from development partners will remain vital to sustain momentum and anchor reforms as external grants decline.

The IMF also cited advances at the Central Bank of Somalia, including stronger regulation and supervision, expanded financial inclusion efforts and improvements to the anti-money-laundering and counter-terrorism financing framework. Preparations to reintroduce the Somali shilling and adopt a currency board arrangement are progressing, the Fund said, describing those steps as crucial to restoring confidence in the national currency and strengthening monetary stability.

The Fund urged Somalia to maintain transparency and accountability in the petroleum sector under its new legal framework and to press ahead with broader governance and anti-corruption measures. It encouraged continued work on climate resilience to lessen the macroeconomic impacts of recurring droughts and floods.

The ECF program, launched in 2023, underpins Somalia’s post-HIPC reform strategy and supports long-term goals set out in the National Transformation Plan and Centennial Vision 2060. With the latest release, the IMF said Somalia’s reform track record remains on course, even as the financing landscape shifts from grants toward domestically financed priorities and carefully managed concessional borrowing.

By Ali Musa

Axadle Times international–Monitoring.