File photo: VCG
MOGADISHU, June 24 (Xinhua) -- The World Bank has approved a 55 million U.S. dollar grant to support Somalia's economic recovery through continued fiscal and other economic policy reforms.
Hugh Riddell, World Bank country manager for Somalia, said the policies will strengthen fiscal management and promote inclusive private sector-led growth.
"The budget support will help protect lives and livelihoods and strengthen the capacity of Somali institutions to respond to the triple crisis of COVID-19 pandemic, locust invasion and flooding that threatens to derail Somalia's reform program and its emergence from fragility," Riddell said in a statement issued on Wednesday.
The supplemental financing helps Somalia ease the effects of the global COVID-19 crisis and continue implementing the reform program supported by the Somalia re-engagement and reform supplemental Development Policy Financing (DPF).
According to the lender, the DPF delivers critically needed financing for Somalia's revised 2020 budget, which allocates funds for an integrated and national response to the pandemic, including increased grants to sub-national governments to ensure continued service delivery.
Somali finance minister Abdirahman Beileh said the 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 percent domestic revenue shortfall and 2.5 percent GDP contraction in 2020," Beileh said.
In March, the World Bank and the International Monetary Fund approved Somalia's eligibility for the Heavily Indebted Poor Countries Initiative, removing the constraints on economic growth and poverty reduction and providing access to instruments to mitigate the impact of multiple crises in Somalia.
Decades of conflict and state fragmentation have left Somalia's public health system constrained and unable to mount an adequate, timely, and effective response to manage the COVID-19 crisis.