Nairobi(Mogadishu24)-The Executive Board of the International Monetary Fund (IMF) approved a new 3-year arrangement under the Extended Credit Facility (ECF) on Wednesday, providing $100 million to support Somalia’s economic development.

“The Executive Board of the International Monetary Fund (IMF) approved a new 3-year arrangement under the Extended Credit Facility (ECF) for Somalia in an amount of SDR 75 million (about 45.9 percent of quota, approximately US$100 million). Approval of the ECF arrangement enables an immediate disbursement of SDR 30 million for budget support (about US$40 million),” read the statement from the IMF.

This 3-year program aims to enhance public financial management through initiatives like payroll integration, expenditure controls, and fiscal transparency. Strengthening debt management capacity and public investment management capacity are also priorities.

The Central Bank of Somalia is set to undergo institutional capacity improvements, including currency reform, to promote financial deepening and inclusion.

The IMF Board highlighted the progress made in strengthening economic and financial institutions, as well as improvements in governance, despite many challenges such as economic, social, security, and climate risks.

“Faced with these challenges, the authorities are embarking on a new 3-year IMF-supported program. The program will support the authorities’ post-HIPC reform strategy to further strengthen key economic institutions and promote macroeconomic stability and growth, in line with Somalia’s national development plan and the government’s long-term vision,” the statement added.

“Reform implementation will be accompanied by extensive IMF capacity development assistance, supported by the Somalia Country Fund.”

This decision came a week after the Federal Government of Somalia successfully completed a previous ECF arrangement approved in 2020, which expired on December 15, 2023, leading to debt forgiveness worth $4.5 billion.

This program is aimed at strengthening Somalia’s financial reforms and policies during this period of post-debt relief, focusing on increased development expenditure, fiscal sustainability, and capacity constraints.

The board reiterated its commitment to advancing reforms in Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) and governance, fostering an environment conducive to private investment.