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#2020BUDGET: Donor reliance ups, domestic revenue slows as security and defence get lion’s share

Storyline:Business, National News

By T. Roble


  • Budget financing of the $476 million split half-way between Somalia and donors
  • Domestic revenue  projected to increase by a small margin  and  deficit stands at $10m
  • Bilateral donors except Turkey pledge  no support as multilateral donors generously open their purses
  • Security and defense  and social sectors see significant increases as  economic sectors  receive the lowest allocation

THE GOVERNMENT IS projecting to source $234 million from the domestic market to fund the $476 million 2020 national budget but will remain with a deficit of $10 million even after the donor community chips in.

The 2020 Appropriations Act endorsed by the Federal Parliament December 31 factors in donor funding to the tune of $231 million which is a halfway split between Somalia and bilateral and multilateral donors.

In the 2019 Budget, the domestic market financed a remarkable part of the budget amounting to $221 million against $169 million from donors. The government projects marginal revenue differences between 2020 and 2019 with the highest margin in taxes on goods and services going up from $23 million in 2019 to $27 million in 2020.

The rest of the revenue areas will also record a marginal revenue difference as the government intends to raise income tax collection from $9.8 million in 2019 to $11.3 million in the current financial year. Customs income is projected to jump to $106 million from $103 in the preceding year.

Total domestic revenue is expected to rise to $155 million from last year’s $146 million.


Notable in the budget is the silence from traditional bilateral donors all of which are not expected to chip in except Turkey which is expected to raise its donation to $30 million from $15 million in 2020.

The government will be banking on multilateral donors which have increased their share of donation by 49%. The donors, including the World Bank, European Union and African Union which finance the budget through various projects are expected to inject a total of $233 million. This also includes the EU budget injection of $33 million from its EUR 100 million budget support announced in 2018.

A hole of $10 million will remain in the FY2020 budget following a top-up from the earlier $459 million approved by cabinet to $476 million. In the newly approved Appropriations Act, the government set its 2020 expenditure at $476,150,903 while expected revenue both locally and internationally adds up to $ 466,150,903. The  Finance Minister may  be banking on the expected oil licensing rounds to fill the budget deficit but that will be dependent on how fast the government moves to finalise the licensing rounds which have so far been hit by delays as the Upper House is yet to pass the Petroleum Bill besides other regulatory frameworks.


The 2020 budget is an increase from last year’s $390,136,991. Spending is projected to rise in virtually all sectors with the usual areas-defense and security gobbling up a better part of the budget. Defense will take up an additional $18 million from last year to stand at $84 million while internal security was allocated $63 million up from $52 million.

Commendable in the budget increases in allocations to social sectors which got a $23 million boosting investments in education, health, sports and youth to the tune of $64 million. Economic sectors, however, received little attention with a marginal increase of $7 million adding up to $42 million.

According to the newly released 9th National Development Plan, the government will need to increase spending on social and economic sectors to realise the Plan’s objective of poverty reduction. However, the drafters of the Plan note, the government will have to rely on donor funding to finance the five year plan as domestic resources remain way below thresholds to fight poverty.

The National Independent Electoral Commission was allocated $3 million up from $1.7 in 2019 as the polls body prepares the country for elections this year.