The Somali President signs the 2023 budget approved by the Federal Parliament

 Somali President Hassan Sheikh Mahmoud has signed the Government Budget Act 2023, which was passed by the Somali Federal Parliament last week. The President praised the Ministry of Finance and Somali economic experts for preparing a budget in line with the national vision for development, rebuilding the army and liberating the country, noting the increase in the budget, which has reached the threshold of one billion dollars.

The President also praised members of the Somali parliament, the People's Assembly and the Senate, for how they fulfilled their constitutional obligations, regarding the country's new budget and its approval within the legal period. The total state budget for this year is $973,985,805, and it has been increased this year with regard to health, education, security and defense.

The Minister of Finance and officials of the government financial sector in Somalia participated in the signing ceremony of the General Budget Law. At the end of December 2022, the Somali parliament approved the state budget for 2023, after discussions that lasted three sessions.

In the middle of last month, the Council of Ministers presented the budget to Parliament after its approval, and it depends on local revenues and international grants, which reached 70%. The 2023 budget focuses on increasing domestic revenues, which are expected to exceed previous years, with an expected amount of $283.3 million, compared to $247 million this year.

Last October, the head of the International Monetary Fund's mission in Somalia told Reuters that the fund had reached an expert-level agreement with Mogadishu that would allow the release of about ten million dollars to the state once approved by the Fund's board. Laura Jaramio explained that the agreement came after a review of the extended credit facility for Somalia in Nairobi.

She praised the authorities for sticking to economic reforms despite a prolonged drought, the impact of the Ukraine crisis and persistent security concerns. Jaramio said the IMF board is expected to review the agreement, which was reached at the expert level, in early December.

She added that if Somalia continues to make steady progress on reforms, it may reach the (completion point) in the global debt relief process under the Heavily Indebted Poor Countries Initiative by late 2023, which would allow Somalia to reduce its debt to about $550 million from $5.2 billion. . "That would be a massive achievement," Jaramio said, noting that it would reduce Somalia's debt to about 7 percent of GDP from about 90 percent now.

It will also open new sources of financing for Somalia, which is a great help at a time when the country is working on implementing development programs and promoting growth and employment. Improving domestic revenues will be one of the pillars of the country's economic reforms, including enhancing sales tax collection.

The Fund stated that the outlook for Somalia is still bleak, as GDP growth is expected to reach 1.9% for 2022, down from 2.9% in 2021, and inflation is expected to reach 9% from 4.6% in 2021. He said near-term risks have risen, including a worsening of the food crisis, in which 4.3 million people already face acute food insecurity, if good rains do not resume in 2022 or if commodity prices rise further.