Somalia expects 2.3% growth in 2026, 2.7% in 2027 after IMF review

GOOBJOOG NEWS | MOGADISHU: Somalia’s economy is expected to grow by 2.3% in 2026 before accelerating to 2.7% next year, as the government presses ahead with fiscal reforms amid reduced foreign aid, climate shocks and wider global economic uncertainty.

Finance Minister Bihi Iman Egeh welcomed the latest assessment following IMF consultations with Somali authorities, saying progress in fiscal reforms was helping strengthen economic stability.

“We are pleased that our efforts to advance fiscal reforms are beginning to bear fruit,” Egeh said, adding that Somalia remained on track for growth despite major global challenges.

The IMF says Somalia faces a difficult economic environment, with sharp reductions in foreign aid since 2025, recurrent climate shocks and spillovers from conflict and disruptions in the Middle East weighing on the outlook. Growth is nevertheless expected to recover gradually to 2.7% in 2027 and reach about 4% over the medium term.

The Fund has urged the government to focus in the near term on increasing domestic revenue, maintaining spending discipline and strengthening public financial and debt management. It has also identified stronger financial supervision and inclusion as priorities while Somalia advances reforms to its monetary and currency framework.

The emphasis on domestic revenue comes as Somalia seeks to reduce its vulnerability to fluctuations in external assistance. Previous IMF assessments have highlighted the importance of expanding domestic resources while protecting priority spending, including social programmes, as foreign aid declines.

Somalia completed the Heavily Indebted Poor Countries debt-relief process in December 2023, a major milestone in efforts to restore debt sustainability and rebuild economic institutions. The IMF’s current reform programme is part of the government’s broader post-debt-relief strategy to strengthen public finances, improve governance and support longer-term economic growth.

Beyond fiscal reforms, the IMF says Somalia will need stronger governance, a better business environment, greater access to finance, investment in human capital, trade diversification and climate adaptation to achieve more resilient and inclusive growth.

Egeh said the government would continue to prioritise economic stability, including faster domestic revenue mobilisation, disciplined spending, stronger public financial and debt management, and improved oversight of financial services.