2017年-世界发展银行全球_Somalia_Economic_Update_July_2017___Mobilizing_Domestic_Revenue_to_Rebuild_Somalia_66页_1mb

Somalia Economic Update Summary (July 2017)

Core Content

The SOMALIA ECONOMIC UPDATE (July 2017, Edition No. 2) focuses on mobilizing domestic revenue to support Somalia's economic recovery and development. The report highlights the challenges posed by a severe drought, weak fiscal and tax systems, and the country's heavy reliance on external aid and remittances. It outlines a series of short-, medium-, and long-term tax reforms to improve revenue collection and strengthen the fiscal framework.

Main Economic Developments (2015–2016)

• Severe Drought Impact: The 2017 drought led to large-scale food insecurity, crop failures, reduced rural employment, and widespread livestock deaths. It also resulted in significant economic losses:

  • Livestock-related losses: $1.3–1.7 billion
  • Crop production losses: up to $60 million
  • Depletion of water resources: over 50% located in drought-affected areas

• Economic Recovery: Despite the drought, economic recovery was underway in 2015 and 2016, driven by remittances, donor support, and a vibrant private sector. However, growth remained uneven, with urban-based and consumption-driven activity.

• Inflation and Prices: Inflation was low (1.5%) in 2016, but food prices were unaffordable for many. Spatial price disparities remained, with food prices rising due to the drought.

• External Imbalance: The current account deficit was 15% of GDP, primarily due to high imports (62% of GDP) and low exports. The large deficit is a vulnerability for the economy.

• Fiscal Challenges:

  • Domestic revenue (taxes and fees) was only 2.7% of GDP in 2016, limiting the government's ability to fund services.
  • Revenue growth was flat in 2016, reversing earlier trends.
  • Unrealistic revenue projections led to cash rationing and weak fiscal management.
  • Recurrent spending accounted for over 97% of total government spending in 2016, with capital spending at just 3%.
  • Donor contributions were crucial but unpredictable, affecting budget execution.

• Monetary Policy Constraints: The monetary policy scope was limited due to weak institutional capacity and currency instability.

Outlook and Risks (2017–2019)

• Economic Growth: Expected to slow to 2.5% in 2017, but accelerate in subsequent years.
• Medium-Term Growth: Projected to grow at a steady 5–7% nominal rate annually, driven by private sector activity, remittances, lower oil prices, and improved security.
• Key Risks:
  • Domestic: Conflict and insecurity in some areas and the threat of famine continue to dampen growth prospects.
  • External: High dependence on remittances and donor support makes the economy vulnerable to external shocks.
  • Security Challenges: Terrorism has discouraged investment and shifted government priorities toward security.

Special Focus: Domestic Revenue Mobilization

Overview

• Tax Revenue: FGS tax revenue in 2016 was just over 2% of GDP, with over 80% coming from trade taxes.
• Informal Economy: A large informal sector (especially in agriculture and livestock) hampers tax compliance and revenue collection.
• Revenue Constraints:
  • Low and narrow tax base
  • Weak tax administration
  • Illicit revenues by local authorities
  • Double taxation between FGS and FMS
  • Nuisance taxes that do not contribute meaningfully to the economy

Recommended Reforms

Short-Term Measures (within 2 years)

• Streamline tax laws
• Tackle informal sector taxation (especially agriculture and livestock)
• Enforce income taxes on wages and salaries
• Increase tax compliance among large companies
• Introduce departure fees and other non-tax revenue sources

Medium-Term Reforms (2–5 years)

• Broaden tax base (e.g., wage and corporate income taxes)
• Expand territorial coverage of tax collection
• Harmonize tax and tariff systems across FMS
• Improve public financial management and governance

Long-Term Reforms

• Consolidate earlier reforms around a modern tax system
• Strengthen legal and regulatory frameworks
• Build capacity for tax administration and revenue collection

Revenue Projections

• Baseline Scenario: Domestic tax revenue to GDP ratio would rise from 2.0% in 2015 to 2.7% in 2022
• Short-Term Reforms: Could increase domestic revenue to 6% of GDP by 2022
• Medium-Term Reforms: Could raise it to 9% of GDP by 2022
• Long-Term Reforms: Could increase it to 13% of GDP by 2022

Key Challenges and Constraints

• Low Tax Base: Limited to trade and informal sectors
• Weak Tax Administration: Poor compliance and enforcement
• Fragmented Revenue Instruments: Nuisance taxes and double taxation
• Security Issues: Impact on tax collection, economic activity, and investor confidence
• Coordination Gaps: Between FGS and Federal Member States (FMS) in revenue assignment and expenditure responsibilities

Conclusion

Mobilizing domestic revenue is critical for sustainable development and state-building in Somalia. Reforms in tax administration, legal frameworks, and public financial management are necessary to increase revenue and reduce dependence on external aid. The government must also ensure peace and security to support tax compliance and economic recovery. The World Bank and international partners have a key role in facilitating reforms and capacity building.

Key Figures and Data

• Nominal GDP Growth: 5% in 2015, 6% in 2016
• Domestic Revenue to GDP: 2.7% in 2016
• Current Account Deficit: ~15% of GDP
• Imports to Exports Ratio: ~4:1
• Donor Disbursements: Often fell short of commitments
• FGS Revenue: ~$113 million in 2016, covering ~60% of federal budget

Lessons from Other Countries

• Afghanistan’s Experience: Demonstrates that reforms can increase revenue and improve fiscal sustainability.
• Somalia’s Context: Requires tailored approaches that align with local conditions, especially security and informal economy dynamics.

Final Remarks

The Somalia Economic Update emphasizes that domestic revenue mobilization is not only a financial necessity but also a cornerstone of state-building. Reforms must be sequenced, inclusive, and sustained to ensure long-term economic growth and improve living standards.