Somalia to miss IMF review programme over election delays

Minister of finance of the Federal Government of Somalia Abdirahman Dualleh Beileh [File photo]

MOGADISHU, Somalia - It's now certain that Somalia will miss the crucial funding from the International Monetary Fund [IMF] due to the elections delays which have impaired reviews by the global lender which were supposed to be done by May this year.

On Thursday, outgoing President Mohamed Abdullahi Farmaajo, Finance Minister Abdirahman Baileh, and IMF mission chief for Somalia Laura Jaramillo discussed Somalia’s IMF budget program which is due for a review in the middle of May 2022.

The IMF reiterated that it will stop funding the country until a new government is formed, an indication that the incoming government may not beat the May deadline thus forcing an automatic termination of the deal between the two entities.

This will risk the disbursement of budget support grants, opening a financing gap, and without other financing options available for the Somali government, the financing gap could result in new domestic arrears, meaning delays in payment of wages, allowances, and essential goods and services; and derail the timing for the HIPC Completion Point and full debt relief, the IMF said.

Besides the protracted confrontation between the opposition and outgoing President Mohamed Abdullahi Farmaajo, the president has also struggled to contain escalating wrangles with Prime Minister Mohamed Hussein Roble, who is the head of the government.

“Political uncertainty and election delays are also affecting Somalia’s IMF-supported program. All IMF-supported programs are reviewed by the IMF Executive Board on a semi-annual basis to assess whether commitments are adequate to achieve the program’s objectives," IMF said in a statement.

It now looks certain Somalia will need an extension for a review, because of the election delay, but it is not automatic as it would still depend on the approval of the IMF Executive Board. It seems very unlikely a new government committed to Somalia’s financial reform agenda would be in place to agree to a deal, IMF noted.

According to analysts, the possibility of concluding elections in time now looks uncertain, following the inability of the administration to beat the February 25 deadline as agreed between stakeholders in December last year.

Sources privy to Thursday's meeting insist that Farmaajo distanced himself from the election delays, noting it was no longer his responsibility, citing that he handed over election management to Prime Minister Mohamed Hussein Roble.

Every month, there is a $10m gap between the government revenue and its expenditure. Somalia’s international partners stopped their budgetary support to Somalia, following delayed elections.

The country heavily depends on external financiers where IMF and World Bank are crucial partners for decades now. The new standoff means Somalia will have significant budget deficits as the new government takes over perhaps in July this year or probably even later.

GAROWE ONLINE