The World Bank Board has approved a $55 million International Development Assistance (IDA) grant for Somalia to fast track economic recovery and policy reforms.
The aid, approved on Tuesday, would also help the country battle multiple crises among them devastating effects of Covid-19 pandemic, which has left over 2,700 people infected by the virus and more than 90 dead.
“The budget support will help protect lives and livelihoods and strengthen the capacity of Somali institutions to respond to the triple crisis of the Covid-19 pandemic, locust invasion and flooding that threatens to derail Somalia’s reform programme and its emergence from fragility,” said World Bank country manager for Somalia Hugh Riddell.
The World Bank and the International Monetary Fund approved Somalia’s eligibility for the Heavily Indebted Poor Countries (HIPC) initiative on March 25, removing the constraints on economic growth and poverty reduction and providing access to IDA instruments.
The World Bank’s monetary aid implementation of reform programme supported by development policy financing will also support for Somalia’s revised 2020 budget.
“Our revised budget expands cash transfers to vulnerable households and provides a substantial increase in grants to sub-national governments to help them respond to the pandemic in the face of declining revenue. The supplemental financing will help in plugging our public expenditure gap given the 29 per cent domestic revenue shortfall and 2.5 per cent gross domestic product contraction in 2020,” said Somalia’s Minister of Finance Abdirahman Beileh.
The Somalia re-engagement and reform supplemental Development Policy Financing is one component of the World Bank Group’s comprehensive response to the multiple crises Somalia is facing.
It includes investments in health systems, support for livelihoods threatened by locusts and flooding, improved fiscal co-ordination between federal and state governments, and financing of direct cash transfers to poor and vulnerable households.