The IMF on Monday renewed its warning that funding for Somalia could be cut off if the government continues to delay elections in the troubled Horn of Africa nation.
The polls have been delayed for more than a year and the government on February 26 again extended the voting deadline in the lower house of parliament.
“Timely resolution of the political uncertainty and successful completion of elections is critical to avert the automatic lapse of the IMF-supported program,” the International Monetary Fund said in a statement following virtual consultations with Somali officials.
The IMF’s program in Somalia is due for a review in mid-May, but a new administration may not be in place in time to endorse planned reforms.
The four-year mandate of President Mohamed Abdullahi Mohamed, better known by his nickname Farmajo, expired in February of last year, but the scheduled elections were delayed when he tried to extend his term.
The Washington-based crisis lender in March 2020 announced debt relief for Somalia under the Heavily Indebted Poor Countries (HIPC) Initiative, which would slash the country’s debt load to $557 million from $5.2 billion, once it completes the reforms.
At the same time, the fund approved a three-year package for $395.5 million in financial assistance.
But failure to complete the review of the country’s economic reform progress would “jeopardize the disbursement of budget support grants and derail the timing for full debt relief” under the HIPC program, the IMF said.
“To keep the program on track, IMF staff would – once a president is elected – confirm the authorities’ commitment to the economic program.”
One of the poorest countries in the world with nearly 70 percent of its population living on less than $1.90 a day, Somalia is struggling to recover from decades of civil war and has also been battling an Islamist insurgency for decades.
The IMF said the economy is expected to grow 3.2 percent in 2022.