Saturday January 31, 2026
Mogadishu (HOL) — Somalia and the European Union on Friday signed a €102 million ($110 million) financing agreement aimed at shoring up the federal government’s budget and sustaining reforms seen as critical to the country’s fragile state-building efforts.
The deal, finalized in Mogadishu after high-level talks, provides direct budget support and development financing as Somalia works to stabilize public finances after decades of conflict and institutional collapse. EU officials described the agreement as a signal of continued confidence in the government’s reform agenda.
The agreement was signed following strategic discussions between senior EU representatives including officials from the EU Office in Somalia and its international partnerships division and members of Somalia’s federal cabinet. The Somali delegation was led by Finance Minister Biixi Imaan Cige and Planning, Investment and Economic Development Minister Mohamud Abdirahman, widely known as Beenebeene.
Under the agreement, the €102 million package is aligned with Somalia’s National Development Plan and targets core areas of governance, including strengthening federal institutions, financing national development priorities and providing predictable budget support. EU officials said the funds are designed to help the government meet day-to-day obligations while continuing longer-term economic modernization.
Somalia has increasingly relied on direct budget support as it attempts to rebuild a functioning state after more than 30 years of civil war. Recent reforms backed by international lenders and donors have focused on improving revenue collection, tightening public financial management and reducing dependence on ad hoc aid.
Finance Minister Biixi said the EU’s sustained support has played a key role in maintaining economic stability at a time when the government faces rising security costs and growing public expectations.
“The European Union’s budget support has been essential for meeting recurrent expenditures and for advancing long-term development projects that drive economic growth,” he said, thanking Brussels for what he called an enduring partnership.
EU officials, for their part, emphasized that the funding is conditional on continued progress in governance and fiscal discipline, a standard feature of budget support programs. They said the agreement reflects a shared commitment to move Somalia toward greater self-reliance and stronger public institutions.
The deal adds to a series of recent international financing arrangements that have followed Somalia’s debt relief under the Heavily Indebted Poor Countries initiative, a milestone that reopened access to concessional funding after years of isolation.