April 1, 2014 / 6:50 AM / 5 years ago

Somalia state budget to double spending in 2014

MOGADISHU (Reuters) - Somalia’s budget forecasts a doubling of spending and tax revenues in 2014, the government said on Monday as it set out plans to widen the tax base in the battered nation, which still relies heavily on aid for basic humanitarian support.

Presenting the budget for the year to parliament, Finance Minister Hussein Abdi Halane said spending would increase to $218 million in 2014 from $114.3 million last year.

The prime minister’s office said in a statement that income from domestic taxes would rise to about $130 million to help fund education, health and job creation. Previous government estimates put the 2013 tax collection at about $54 million.

Somalia is still struggling to rebuild after more than two decades of conflict and the new budget will be dwarfed by donor spending. The United Nations alone pumped in more than half a billion dollars for basic humanitarian needs in 2013.

The government is also still battling an Islamist insurgency by the al Shabaab rebel group.

“The future prosperity of Somalia is directly linked to peace and stability, and we must continue to work to create an environment which is attractive to investors and businesses which will benefit all Somali people,” Prime Minister Abdiweli Sheikh Ahmed told parliament in his address.

Somalis who have lived abroad have started bringing back capital to build new businesses, such as hotels. But that is largely focused on the capital Mogadishu, where bombed out remains of buildings surround new construction projects.

Donor projects on health, education, infrastructure and economic development account for the remaining $88 million of forecast spending, the prime minister’s office said.

Reforms will make businesses contribute their “fair share” towards rebuilding Somalia, the prime minister said.

“Up until now the state’s revenue has relied almost solely on customs collection from Mogadishu airport and port, we must broaden and in many cases introduce new taxes on sectors of our economy,” he added.

The 2014 budget was due to be presented to parliament at the end of 2013 but a row President Hassan Sheikh Mohamud and the then prime minister meant it was not put forward.

The president appointed a new prime minister and cabinet in January, expanding the number of ministries to 25 from 10.

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