Regulatory Alerts2024-12-21
Somalia’s Government Fiscal Operations
The Central Bank of Somalia details essential fiscal reforms to sustain macroeconomic stability, requiring the government to boost domestic revenue and reduce volatile donor dependency following HIPC debt relief completion. Despite surpassing 2023 revenue targets by 16 percent, Somalia struggles with a 3 percent tax-to-GDP ratio, recurrent expenditures consuming 98 percent of the budget, and inefficient capital spending. The policy brief mandates accelerating national revenue authority legislation, implementing digital tax systems, and reallocating funds toward capital investments to achieve a sustainable 10 percent tax-to-GDP ratio.
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