Somalia has formally requested extra $40M IMF funding to bolster its economy against significant foreign aid cuts and to support ongoing economic reforms.
This request is part of the country’s existing 36-month Extended Credit Facility (ECF) arrangement, which was approved by the IMF Board in December 2023.
Purpose of the Extra $40M IMF Funding Request
The Somali authorities have asked for an augmentation of Special Drawing Rights (SDR) 30 million (approximately $40 million), to be disbursed in equal tranches following the fourth and fifth reviews of the ECF arrangement.
This additional funding aims to mitigate the adverse effects of reduced foreign aid.
And also to support Somalia’s reform efforts, including expanding social spending.
The request is subject to approval by the IMF’s Executive Board.
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Economic Context
In the 2025/26 fiscal year, Somalia’s economic prospects have weakened.
Due to significant foreign aid cuts and adverse weather shocks.
The IMF projects real GDP growth at 3% in 2025 and 3.3% in 2026, with inflation expected to remain stable at around 3.5%.
An overall fiscal deficit of 0.3% of GDP is anticipated for 2025.
The preliminary 2026 budget plan focuses on continued progress in domestic revenue mobilization and expenditure discipline.
While accommodating additional security and election-related spending.
Revenue and Debt Relief Progress
Despite external challenges, Somalia has made notable strides in domestic revenue collection, which grew by 12% to $369 million in 2024.
Driven by increases in rental and sales taxes.
In 2024, Somalia achieved the Heavily Indebted Poor Countries (HIPC) Completion Point, securing irrevocable debt relief amounting to $4.5 billion, over 90% of its external debt stock.
This milestone significantly reduced the country’s external debt-to-GDP ratio from 64% in 2018 to less than 6% by the end of 2023.
What is the Response on the Extra $40M IMF Funding?
The IMF emphasizes that advancing reforms and continued assistance from international partners remain critical to support Somalia’s efforts to secure a more robust and sustainable economic future.
The proposed $40M IMF funding is a key component of Somalia’s strategy to navigate current economic challenges and to continue its path toward economic stability and growth.
