Rebuilding the Fiscal Capacity in Post-conflict Somalia: A Critical Review of Public Financial Reforms and Governance Challenges

Abstract
Somalia is a fragile economy in which conflicts have impeded the country’s overall economic performance and fiscal capacity after the fall of the central government in 1991. With an objective to study the fiscal capacity of Somalia including reforms in taxation, spending and challenges, this study utilised the available fiscal data from 2012 to 2021, with a little preview of historical fiscal data where it makes a meaning. Furthermore, reviewing literature and interviewing fiscal experts were additionally utilised to support the descriptive data. The mixed methodology was employed to capture the depth of contemporary revenue collection and expenditure management, challenges of fiscal reforms and key policy areas to address. The study finds that the government has made remarkable progress towards
rebuilding fiscal policy, but mostly in Mogadishu, in the last decade. This progress includes revenue mobilisation, public financial management reforms, execution of the budgets, and auditing financial governance. However, many areas of the
country’s fiscal policy still remain weak and fragile as chronic security challenges hinder the reach of many parts of the country for revenue collection. To strengthen these weaknesses, the study makes several policy recommendations – also applicable to other post-conflict economies with similar situations – to strengthen the foundation of the fiscal sector in Somalia.