Somalia Moves to Reintroduce National Currency

By Abdullahi Salad - Reporter

Somalia, 22 December 2025 Somalia has stepped up preparations to reintroduce its national currency, the Somali Shilling, as part of broader monetary reforms supported by the International Monetary Fund, according to a newly released IMF country report.

The plan, led by the Central Bank of Somalia, centers on a currency exchange project that would replace existing notes in circulation with newly issued Somali Shilling banknotes. The initiative is described as a national priority and a key pillar of efforts to strengthen monetary sovereignty and financial stability.

As part of the reform, Somalia intends to adopt a currency board arrangement, under which the Somali Shilling would be fully backed by foreign exchange reserves. The framework is designed to enhance confidence in the currency by sharply limiting discretionary monetary policy and ensuring strict discipline in money issuance.

The IMF said technical preparations for the currency exchange are progressing, with Somali authorities working to secure co-financing for the project and to reach a firm agreement with all Federal Member States before implementation begins.

To provide a solid legal foundation for the reform, draft amendments to the Central Bank of Somalia Act are being finalized.

The changes are expected to strengthen the central bank’s mandate, governance, autonomy, transparency, and accountability, while formally establishing the currency board arrangement.

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The amended law is scheduled to be submitted to parliament by the end of 2025.

Following the adoption of the revised law, the central bank plans to issue detailed regulations governing foreign exchange operations and the functioning of the currency board.

These include rules on selecting counterparties and requirements to publish the currency board’s balance sheet on a weekly basis to ensure transparency and public confidence.

The IMF cautioned that the credibility of the new Somali Shilling will depend on maintaining fiscal discipline, safeguarding central bank independence, and continuing broader economic reforms. These conditions, the Fund noted, are essential to sustaining confidence once the national currency is formally reintroduced.

Somalia has operated under a de facto dollarized system for decades following the collapse of the central government in 1991.

Authorities view the planned currency reform as a milestone in rebuilding state institutions and restoring core economic functions.

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