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Project Description
6. The proposed operation is a single-tranche, Supplemental DPF that would provide an additional disbursement to
the parent Somalia Reengagement and Reform DPF (P171570), which was approved by the Board of Executive Directors
on February 27, 2020. The DPF supports an economic policy reform program that is rooted in Somalia’s National
Development Plan (Somalia’s poverty reduction strategy), which aims to move the country out of chronic fragility. The
reform program is designed to enable Somalia to obtain debt relief through the Highly Indebted Poor Countries (HIPC)
initiative and channel the benefits of debt relief towards reducing poverty and sustaining inclusive economic growth.
Somalia reached the HIPC Decision Point on March 25, 2020.
7. Pillar 1 of the parent DPF strengthens fiscal management in Somalia by supporting reforms in areas of debt
management, revenue mobilization, public expenditure containment, budget accountability, and intergovernmental fiscal
arrangements. Pillar 2 of the parent DPF promotes inclusive private sector-led growth by supporting reforms aimed at
improving the business and investment climate in general as well as targeted sectoral regulations. Somalia continues to
make progress on the reform program supported by the parent operation. For example, the government is preparing
regulations under the Public Financial Management and Companies Laws. (These regulations are also triggers for reaching
the HIPC Completion Point.) And the Central Bank and the National Communications Authority are working with the
institutions that are now subject to the new regulations that the DPF supported.
8. Other development partners are also providing budget support financing to Somalia to address the crisis. The African
Development Bank is expected to provide US$12 million through a new policy-based financing operation. The EU has
reallocated around $7 million previously programmed for 2021 to support the FGS in 2020. Its adjusted budget support is
currently projected at $25.3 million. The World Bank’s Third Recurrent Cost and Reforming Financing (RCRF) IPF (P173731)
is projected to disburse US$3.2 million in calendar year 2020, bringing total expected 2020 financing of civil service salaries,
inter-governmental grants, and other non-project recurrent costs under the RCRF IPFs to $36.4 million. Turkey is providing
a grant of US$30 million in 2020 |
