IMF approves 3-month extension of credit facility for Somalia

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IMF
IMF

The International Monetary Fund (IMF) said its board has approved a three-month extension of credit facility which could enable Somalia to access budgetary funding.

The 395.5 million U.S. dollar extended credit facility (ECF) which was approved in March had been delayed due to legislative and presidential elections as IMF had given up to May 17 to confirm some policy understandings with the new government before Mogadishu could access the funding.

“Without the extension, the ECF arrangement would have automatically expired on May 17, 2022, in line with the rule on automatic expiration of ECF arrangements if no review has been completed for 18 months,” the IMF said in a statement issued on Tuesday evening.

The lender said the extension will provide the time needed to confirm policy understandings with the new government and confirm financing assurances with development partners, which are required for the completion of the second and third reviews under the ECF arrangement.

The IMF said last week that its staff had reached an agreement with the government on the second and third reviews of the ECF which it said is an advantage given to Somalia to tap into external lenders as long as the government continues with governance reforms.

Somalia is also facing prolonged drought conditions that worsened since 2021 and pressures on food security have been compounded by the increase in global food and energy prices, the IMF said.

According to the IMF, the authorities continue to advance reforms on domestic revenue mobilization, including customs modernization and increasing revenue collection from the telecom sector. Enditem

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