International Monetary Fund (IMF) staff on Wednesday reached a preliminary agreement with Somalia that will allow for the release of $100 million in funding under a new 36-month credit programme, the fund said.
The so-called staff-level agreement under the Extended Credit Facility (ECF) is subject to approval from the fund’s board. It is to help Somalia’s economic institutions put together policies for when it reaches the point it can achieve debt relief under the fund’s Heavily Indebted Poor Countries Completion scheme, aimed 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 fighting the al Qaeda-linked al Shabaab group since 2006. The group, which aims to overthrow the government, has been carrying out frequent gun and bomb attacks that also target peacekeeping troops supporting the government.
The country has also over the years experienced bouts of drought and floods that have led to thousands being displaced.