Build on National Development Plan as PRSP, IMF tells Somalia

The Poverty Reduction Strategy Paper (PRSP) is a key component of the debt relief process

By T. Roble

The IMF has urged Somalia to narrow down priorities and include a costing component in the next National Development Plan (NDP) so that it can serve as an interim Poverty Reduction Strategy Paper (PRSP) which is a key threshold in the debt relief process.

The global lender also called on the Federal Government to incorporate findings of the Drought Impact and Needs Assessment and Recovery and Resilience Framework (DINA) into the NDP 9.

According to the DINA report released in March 2018, the 2016/17 drought caused losses amounting to $2.23 billion while damages were estimated at $1 billion. The assessment also indicates $1.77 billion would be needed over a period of 4-5 years for recovery with priorities going to agriculture, urban development and municipal services for IDPs.

READ ALSO: IMF chief lauds Somalia’s economic reform track, upbeat on debt relief

A PRSP developed through a broad-based participatory process is one of the requirements for debt relief seeking countries to reach the ‘decision point’ under the Heavily Indebted Poor Country (HIPC) Initiative.


The IMF’s remarks follow agreements with Somalia for a forth Staff Monitored Programme (SMP IV) May 2019—July 2020.

According to a statement, the IMF said it expected the Board to endorse the SMPIV ‘as meeting the conditionality standard of an upper credit tranche (UCT) arrangement, putting Somalia more clearly on the path to debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative’.

The UCT arrangement refers to a typical IMF loan which features an annual access limit of 100 per cent of a member’s quota, quarterly disbursements, a one- to three-year maturity structure, and a three- to a five-year repayment schedule.

The IMF also lauded the Somali government for broadening the tax base and strengthening tax administration which saw domestic revenues climb to $184 million in 2018, a 30% increase from the preceding year. Domestic revenue in the first quarter of 2019 amounted to $54 million against an annual $340 million budget.

The Bretton Woods institution also sounded upbeat about Somalia’s economic prospects estimating a 3% GDP growth by year end as inflation eases to 3.0% from the current 3.2%.



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