The deal, according to Laura Jarramio, was reached following an assessment of Nairobi’s extended credit facilitation.
Despite the protracted drought, the effects of the Ukraine crisis, and continued security worries, she commended the authorities for upholding economic reforms.
Jaramio said that the International Monetary Fund Council is expected to review the agreement, which was reached at the level of experts, in early December.
She added that if Somalia continues to make a steady progress in the reforms, it may reach (the completion point) in the process of reducing the burdens of global debt under the initiative concerned with the poor debt burden countries by late 2023, which will allow Somalia to reduce its debts to about 550 million dollars from 5. USD $2 billion.
This will be a remarkable accomplishment, said Jaramio, stressing that Somalia’s debts will drop from around 90% of GDP to about 7%.
Additionally, it will make new financial avenues available to Somalia, which will be very beneficial as the nation works to put economic and employment-promoting policies into place.
The cornerstones of the nation’s economic reforms will be increased municipal income generation, especially better sales tax collection.
According to the Foreign Monetary Fund, Somalia still requires ongoing assistance from international partners due to the country’s acute food crisis, but it also needs to make efforts to improve its capacity to absorb climate shocks over the long term.
The Fund noted that the outlook for Somalia remains dismal, with GDP growth predicted to be just 1. 9 percent, down from 2, is projected for 2022. Inflation is anticipated to increase from four percent to nine percent in 2021. 6 percent in 2021.
In the medium term, he claimed, risks rose, including the escalation of the food crisis, which 4. 3 million people are already facing acute food insecurity, if the rain is not resumed at good rates in 2022 or if the prices of basic commodities rise more..
The IMF and Somalia are negotiating at the expert level.
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