Cabinet approves $340m 2019 budget, upbeat on domestic sourcing

The cabinet has today approved a $340 million budget for the financial year 2019, the largest in recent years tripling the 2013 budget which stood at $114 million.

The budget which is also an increase of $70 million from last year’s $274 will see its financing drawn from the domestic market, the government said Monday sounding up beat on lowering donor reliance.

“I am pleased that the cabinet has approved the 2019 national budget today. Our budget has now risen to $340M. This progress is the result of our economic and fiscal reforms and focus on rising domestic revenue. Our reform will be supported by our commitment to good governance,” Prime Minister Hassan Khaire said in a tweet.

The cabinet noted it would seek to finance 55% of the budget from domestic sources while the deficit would be met through donor support. The increasing domestic funding of the budget follows improved domestic sourcing with new sources such as Value Added Tax (VAT) introduced this year and prospective expansion of the tax bracket expected to bridge the gap.

Domestic revenue jumped from $113 million in 2016 to $143 million in 2017 and the government said mid this year revenues in the first quarter alone had risen to $42 million.

According to the Auditor General’s report for 2017, Mogadishu port revenues account for the single largest domestic revenue source standing at $23 million followed by immigration which include passport fees  recorded at $7.2 million.  The introduction of sales tax in the 2018 financial year is expected to up these numbers providing the government much needed revenue to provide services in line with budget estimates.

Other revenue areas include taxation from telecommunication companies which is dependent on the implementation of the Communications Act passed by parliament last August.