On Wednesday, International Monetary Fund (IMF) staff reached an initial accord with Somalia that paves the way for the disbursement of $100 million in funding through a new 36-month credit program, as announced by the fund.
The staff-level agreement, referred to as the Extended Credit Facility (ECF), is contingent upon approval from the IMF’s board. Its purpose is to assist Somalia’s economic institutions in formulating policies as they work toward the goal of securing debt relief through the IMF’s Heavily Indebted Poor Countries Completion scheme, with a targeted timeframe set for December.
“However, despite the progress achieved, Somalia faces significant challenges ahead, including those stemming from economic, social, security, and climate risks,” Laura Jaramillo, who headed a team that conducted a review on Somalia, said in a statement.
“Growth is currently insufficient to reduce widespread poverty, address large social needs, and create sufficient jobs for the youth. Somalia is highly vulnerable to climate shocks that hurt growth and hinder poverty reduction efforts.”
Somalia’s government has been engaged in combat against the al Qaeda-linked al-Shabaab group since 2006. This militant organization, with the objective of overthrowing the government, has been responsible for numerous gun and bomb attacks, often targeting both peacekeeping troops aiding the government and civilian populations.
Over the years, Somalia has also faced recurring periods of drought and flooding, resulting in the displacement of thousands of people.
