Somalia Cabinet Approves 46% Rise in 2021 Budget to $671.8 Million

MOGADISHU, Somalia - Somalia's cabinet approved last Thursday a $671.8 million budget for the 2021 financial year, an increase of 46 percent from the 2020 budget, in yet another move that shows gradual progress of the country's economy, which has been in shambles for several decades.

In recent years, the budget has been increasing due to the expansion of the economy following years of rebuilding which has been done by successive regimes. For instance, the 2020 budget increased by almost 158 percent from 2017' $260 million.

To fund the expanding budget, the country gets 61 percent from international donors which is almost $170.9 million for budget support and $240 million for funded projects. The remaining $260 million will come from domestic revenue collection.

Somalia’s ability to collect taxes domestically has come under fire recently as reports surfaced that Al-Shabaab collects more revenue than the federal government. According to the Hiraal Institute, the militants collect at least $15m [£11m] a month, with more than half the amount coming from the capital, Mogadishu.

The group is still in charge of several strategic towns within the country and some reports suggest that it could be making a comeback to the Somali capital Mogadishu. The city was under the Al-Shabaab before they were flushed out following joint military operations carried out by the Somali National Army and the African Union Mission Forces.

Most business people and others who pay Al-Shabaab often do so under intimidation and threat of violence. The United States is backing efforts to use U.N. sanctions to disrupt Al-Shabaab’s financing capabilities, State Department said in a recent statement.

The budget approval comes days after the World Bank forecasted the Somali economy to shrink by 2.5% this year. The international financial institution revised an earlier prediction of a 3.2% growth due to the global coronavirus pandemic, which has grounded many economic activities.

Speaking at the Fifth Somalia Economic Update, Finance Minister, Abdirahman Dualeh Beileh urged international partners to continue to support the government as the country prepares for national elections at the end of 2020 and early 2021.

“I will caution against the temptation to let the guard down, the temptation to wait until the elections take place," said the veteran minister, who has played a critical role in helping the country has some of the debts written off.

Somalia has been fighting for stability for the last 30 years following the toppling of Siad Barre's military regime in 1991. Since then, inter-clan conflicts and Al-Shabaab resurgence have derailed efforts to restore the country's much needed peace and stability.

GAROWE ONLINE