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The Somaliland House of Representatives has overwhelmingly approved the 2025 National Budget. In a session led by Speaker Yasin Haji Mohamud Hiir Faratoon, 44 MPs voted in favor, 1 opposed, and 1 abstained.

Following the approval, President Abdirahman Mohamed Abdilahi (Irro) signed the budget into law, totaling nearly four trillion Somaliland Shillings, specifically 3,894,462,279,363 SL Shs, or approximately US$389.4 million.

Last week, Finance Minister Abdillahi Hassan Adan presented the budget to the House of Representatives, seeking approval to cover salaries for military and civil servants. He cautioned that any delays in passing the budget could disrupt government operations and services.

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President Signs 2025 National Budget Following House Approval
Finance Minister Abdillahi Hassan Adan

The Minister emphasized the importance of strengthening revenue-generating institutions and expanding the tax base in eastern Somaliland. He urged the House to approve the budget by the 25th of the month to meet pressing financial obligations, including salaries for security forces and government employees.

This approval represents a crucial step toward financial stability and the continued provision of public services in Somaliland.

A Brief Analysis

The 2025 National Budget for Somaliland has been a focal point of recent discussions, reflecting the government’s fiscal priorities and economic strategy.

President Signs 2025 National Budget Following House ApprovalBudget Overview:

Total Budget: The Somaliland 2025 National Budget totals 3.89 trillion Somaliland Shillings, which converts to approximately US$390 million.

Approval Process: The budget was approved by the Somaliland House of Representatives and subsequently signed into law by President Abdirahman Mohamed Abdillahi (Irro).

Allocation Breakdown:

Payroll: A significant portion, 58% of the budget, is allocated to payroll, indicating a large part of expenditures goes towards salaries for public sector workers.

Expenses: Another 19% is designated for various operational expenses.

Development: This leaves 23% for development projects, which has drawn criticism for being insufficient for the growth and infrastructure needs of Somaliland.

Key Points:

Economic Strategy: The budget reflects a strategy focused on maintaining government operations but with limited funds for development. This has sparked debates on how Somaliland can achieve sustainable development with such allocations.

Criticism: There’s been significant criticism, particularly from opposition MPs, highlighting the imbalance between recurrent expenditure (payroll and expenses) and development spending. Critics argue this allocation shows the government in a “survival mode” rather than aggressively pursuing growth opportunities.

Revenue Expectations: While detailed revenue projections weren’t specified, the budget’s passage suggests confidence in domestic revenue collection alongside possible external financial support or investments, especially given Somaliland’s ongoing efforts to attract foreign investment.

President Signs 2025 National Budget Following House ApprovalImplications and Challenges:

Sustainability: The high payroll allocation might suggest fiscal challenges in balancing between immediate operational needs and long-term development goals.

Development Projects: With only 23% for development, there are concerns about how Somaliland will fund essential infrastructure like roads, schools, and healthcare facilities, which are crucial for economic growth and public welfare.

International Recognition: The budget also indirectly touches on Somaliland’s quest for international recognition. Economic stability and effective governance are often cited as arguments in favor of recognition, but with limited development spending, this narrative might be challenged.

Future Outlook:

The implementation of the 2025 budget will be crucial for Somaliland’s economic trajectory. There’s a need for more strategic fiscal management to ensure that development isn’t continuously sidelined by recurrent expenditures.

To address the development budget constraints, the government might need to explore innovative financing methods, enhance revenue collection, or seek more international partnerships.

The budget’s success in meeting Somaliland’s needs will also depend on external factors, including the international community’s engagement with Somaliland given its political status.