Finance ministers from various levels of government concluded a three-day Finance Ministers Fiscal Forum (FMFF) in Mogadishu on Monday. The meeting, led by Finance Minister Bihi Egeh, brought together finance ministers from the Federal Government of Somalia, Federal Member States, and the Banadir Regional Administration to discuss and agree on crucial fiscal policies and strategies.
Key Focus Areas of the Forum
The FMFF aimed to enhance the public financial system and promote cooperation among different government levels. During the forum, the ministers focused on key elements critical for fiscal federalization and transparency. Among the major topics discussed were grant-sharing formulas, unified taxpayer identification, and strategies for equitable resource allocation.
Unified Taxpayer Identification: One of the significant agreements reached during the forum was the implementation of a unified Taxpayer Identification Number (TIN) system. The ministers agreed on a 12-digit TIN format to categorize taxpayers into individuals, businesses, and organizations. This system aims to streamline tax collection and improve compliance across the country, fostering a more robust and accountable tax system.
Grant-Sharing Formula: The ministers also committed to honoring the decisions made during the 18th FMFF meeting regarding the grant-sharing formula. This approach is designed to address historical disparities in resource allocation, ensuring that all regions receive a fair share of the national revenue. By implementing a formula-based approach, the forum aims to promote equity and accountability in distributing financial resources.
Reviewing Fiscal Federalization Proposals
The forum reviewed proposals from the Chairman of the Technical Committee on Fiscal Federalization (IGFFTC), focusing on findings from the 16th FMFF meeting. These proposals highlighted the progress and challenges in implementing fiscal federalization across Somalia. The ministers emphasized the need for continuous review and adjustment of fiscal policies to align with the government’s respective capacities and regional needs.
Recurrent Cost and Reform Financing (RCRF) Project: Another critical aspect of the forum was the discussion on the Recurrent Cost and Reform Financing (RCRF) Project. Participants were briefed on the progress of reviewing the political agreement concerning revenue assignment and the functional responsibilities among different levels of government. The forum addressed whether the adopted assignments and responsibilities are implementable, considering the government’s capacities at various levels.
Strengthening Intergovernmental Relations
The FMFF served as a platform to enhance intergovernmental relations, promote transparency, and ensure equitable resource allocation. The ministers agreed that a special meeting would be convened to address potential challenges associated with implementing new strategies under the RCRF-III, 2nd Additional Financing project. This meeting will provide an opportunity for stakeholders to discuss and resolve any issues that may arise during the implementation process.
Laying the Foundation for Sustainable Growth
The outcomes of the FMFF signify a concerted effort toward strengthening financial systems and fostering cooperation across Somalia’s governmental structures. By implementing a formula-based approach to grants and introducing a unified TIN system, the forum promotes equity and accountability, addressing historical disparities in resource allocation that have hampered regional development.
“This lays a solid foundation for sustainable growth and development,” said Finance Minister Bihi Egeh. “By enhancing intergovernmental relations and promoting transparency, we are ensuring that all regions have the opportunity to develop and thrive.”
The FMFF’s agreements and proposals will play a crucial role in shaping Somalia’s economic future. As the country continues to rebuild and develop, such forums provide a platform for dialogue and collaboration, ensuring that the financial system remains robust and responsive to the needs of its people. With a focus on transparency, accountability, and equitable resource allocation, Somalia is well on its way to achieving sustainable growth and development.
