Somalia Approves 24.4% Budget Increase with New Mogadishu Sales Tax

October 8, 2024

The recent approval by the Council of Ministers of the Federal Republic of Somalia for a substantial increase in the national budget for the fiscal year 2025 marks a significant shift in the country’s economic strategy. This new budget, amounting to $1,342,476,311, represents a 24.4% increase from the previous year’s budget of $1,079,315,783. The Ministry of Finance underscored various income sources that contributed to this $263,160,528 increment, with a significant new measure being the implementation of a 5% sales tax in Mogadishu. Notably, this is the first time such a sales tax has been officially enacted in the capital, highlighting the government’s efforts to broaden its fiscal base.

Government’s Strategic Focus

The recent approval by Somalia’s Council of Ministers for a substantial increase in the national budget for fiscal year 2025 signifies a notable shift in the country’s economic strategy. The new budget, set at $1,342,476,311, is a 24.4% increase from last year’s budget of $1,079,315,783. According to the Ministry of Finance, various sources of income contributed to this $263,160,528 rise, including the noteworthy implementation of a new 5% sales tax in Mogadishu. This tax is particularly significant as it marks the first time such a measure has been officially instituted in the capital, underscoring the government’s initiative to expand its fiscal base. The increased budget allocation is expected to address critical areas like infrastructure, healthcare, and education, which are pivotal for Somalia’s long-term development. This decision comes amid efforts to stabilize the Somali economy and improve public services, reflecting a broader commitment to achieving financial autonomy and efficient governance.

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