If long-delayed national elections face fresh delays, the International Monetary Fund (IMF) could end its programme in Somalia in three months, according to a senior official.
The IMF’s Somalia programme is slated for a review in mid-May, but election delays mean that a new administration may not be able to accept proposed reforms in time, according to Laura Jaramillo Mayor, the fund’s country mission chief.
“That evaluation of the IMF-supported programme for Somalia must be finished by May 17; if it is not done by that date, the programme would automatically cease,” she told AFP as she embarked on a journey to the Horn of Africa country.
Mayor said that this would have a significant impact on the impoverished country’s budget and an agreement to reduce its debt from $5.2 billion (4.6 billion euros) in 2018 to a target of $557 million in the future.
Somalia’s elections are more than a year behind schedule, with voting for the lower house of parliament set to close on Friday – a date that many observers expect the country to miss, given that more than 100 seats are still up for grabs.
Somalia’s debt could fall to $557 million, or roughly 6% of its estimated gross domestic product, as early as “next year” under the conditions of the IMF deal, allowing Mogadishu to seek more finance from international partners and help build its private sector, according to Jaramillo.
Somalia, one of the world’s poorest countries, is still recovering from decades of civil war and has been fighting an armed fighter operation for years. Nearly 70% of the population subsists on less than $1.90 per day.
The federal government of the country runs out of $10 million per month to fund essential expenses like employee salaries.
However, Somali authorities, according to Jaramillo, have worked hard to enhance government institutions, particularly in terms of tax collection and public spending oversight.
an infographic about Somalia’s drought (Al Jazeera)
‘There’s a lot of potential here.’
According to the IMF, which has been working with Somalia since 2015, the country’s gross domestic product expanded by 2% in 2021.
Strong household consumption, fueled by remittances from the Somali diaspora, as well as livestock exports, notably to Gulf countries, fueled the expansion.
According to the IMF, remittances totalled more than $2 billion in 2021, comparable to 28 percent of GDP, with 3.2 percent growth expected for 2022.
“Overall, we anticipate a lot of development potential for Somalia in 2022 and beyond,” Jaramillo added.
However, Somalis have had a difficult start to the year, with a severe drought affecting four million people, or a quarter of the country’s population, and driving more than 550,000 people to flee their homes in search of food and water.
If the next rainy season again fails, the IMF will have to modify its growth predictions, according to Jaramillo.
In order to address the cumulative consequences of droughts, locust invasions, and the COVID-19 epidemic, the government is currently providing financial help to around 200,000 disadvantaged households through a World Bank-supported programme.
