Somalia economy seen maintaining growth as IMF backs reform agenda

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Somalia economy growth and IMF reforms

Highlights

IMF staff mission led by Ran Bi reports Somalia maintains reform momentum despite aid cuts, climate shocks, and regional conflicts, but near-term risks remain high.
IMF projects Somalia's fiscal deficit narrowing from 0.9 percent of GDP in 2026 to 0.5 percent in 2027 amid efforts to raise domestic revenue and improve tax enforcement.
IMF emphasizes the need for cautious currency reform, improved financial supervision, business environment enhancements, and climate adaptation to support Somalia's private sector resilience.

IMF mission outlines policy priorities

As reported by the International Monetary Fund, a staff team led by Ran Bi holds discussions with Somali authorities in Nairobi from September 21 to October 1 on the 2026 Article IV consultation and says the country continues to advance reforms despite a difficult operating environment.

The fund says near-term policy needs center on preserving macroeconomic stability through faster domestic revenue mobilization, spending discipline, stronger public financial and debt management, and tighter financial supervision and inclusion. It also says currency reform remains important but should move forward carefully and only with the necessary safeguards in place.

Ran Bi says sharp foreign aid cuts, severe climate shocks and spillovers from regional conflicts weigh on economic activity, lift inflation and add pressure on public finances. While resilient remittance inflows provide some stability, the IMF says Somalia's external position remains vulnerable and near-term risks stay high because of the threat of further climate shocks and renewed regional conflict.

Fiscal discipline and private sector reform remain central

The IMF says the authorities remain focused on raising domestic revenue even as repeated shocks complicate implementation. It projects the fiscal deficit at 0.9 percent of GDP in 2026 and 0.5 percent in 2027, with rising security spending offset by commitments to strengthen revenue collection, improve tax enforcement and harmonize sales tax across governing entities.

The Central Bank of Somalia is also making progress on financial supervision and inclusion, according to the IMF, as it works to safeguard financial stability and widen access to finance. Over the medium term, the fund says stronger governance, a better business environment, greater trade integration, investment in education and climate adaptation are needed to build a more resilient and inclusive private sector.

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