Domestic revenue collection increases in Somalia

MOGADISHU, Somalia - The Federal Republic of Somalia is witnessing an unprecedented economic revolution, following increased revenue collection after various fiscal policies were implemented in the Horn of Africa nation.

Last month, Somalia was subjected to debt relief by international lenders, in what was attributed to fiscal discipline after months of tough regulation. The World Bank and International Monetary Fund (IMF) have been working closely with the country's finance department.

Bihi Iman Egeh, the finance minister, said his department has enacted stringent reforms geared towards improving financial management and extraction of revenues from various businesses.

The minister further said Somalia will record 3.7% growth in 2024 from 2.8% in 2023. This will be the greatest development record in as many months.

Kristina Svensson, head of the World Bank in Somalia said despite recent improvements, the level of domestic revenue is very low to deliver visible results for the citizens, the Voice of America reports.

In the future, she adds, Somalia’s grants will significantly reduce as domestic revenues increase. She said IDA has provided budget support of US$175 million, which has been shared with Federal Member States (FMS) as intergovernmental transfers, over the last two years.

“In recognition of its extreme vulnerability and to support Somalia’s development efforts, in the context of weak institutional capacity and limited fiscal space, IDA has extended the period for which its financing will be provided on grant terms until end-June 2025,” Svensson told VOA.

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