Mogadishu: The International Monetary Fund (IMF) said it has reached a staff-level agreement with Somalia on the third review under the Extended Credit Facility arrangement.
The IMF said in a statement issued on Friday evening that the deal would see the lender unlock 10 million U.S. dollars, which is subject to approval of the IMF Executive Board.
"Continued external assistance from multilateral and bilateral partners remains crucial to support the authorities' policy efforts, especially in light of the high uncertainty and significant downside risks," the IMF said.
The lender estimated a 4 percent growth in Somalia's real gross domestic product in 2024, driven by continued agricultural recovery, while inflation is expected to ease to 5.6 percent by the end of 2024, supported by lower global commodity prices.
The IMF, however, said the country's economic outlook in 2025 is clouded by foreign aid cuts, irregular rainfalls and high uncertainty in the country.
"Real GDP growth in 2025 is expected to slow to 3 percent amid weaker private consumption and imports. Inflation is projected to decelerate to 4.9 percent by the end of 2025, though the pace is slower than previously anticipated," it said, adding that downside risks dominate the near-term outlook.
Fiscal reforms, according to the IMF, continue to progress steadily while the Somali authorities recognize the importance of accelerating efforts to build stronger public finances.
However, it warned that a more severe and sustained reduction in foreign aid would have long-term economic consequences, exacerbate food insecurity and poverty, deteriorate human development indicators, and jeopardize Somalia's progress in rebuilding institutional capacity.
