NAIROBI, October 26, 2026: The Federal Republic of Somalia continued to make progress in domestic revenue mobilization, rising from 6.2% of GDP in 2024 to an estimated 6.3% in 2025. These gains reflect sustained efforts to strengthen fiscal institutions and broaden the revenue base. Building on this momentum will be important to gradually narrow the gap with peer countries, where collections average 15–17% of GDP, while increasing financing for development priorities and essential public services.
The Somalia Public Finance Review (PFR): The Next Stage of Public Finance highlights the importance of building on these gains and strengthening fiscal cooperation across levels of government. As external assistance declines, these efforts will be critical to sustaining growth, creating jobs, and reducing poverty.
Somalia has made important progress over the past decade in rebuilding core fiscal institutions, restoring macroeconomic stability, and strengthening public financial management and reaching the Heavily Indebted Poor Countries Initiative (HIPC) Completion Point. These achievements provide an important foundation for the next stage of reform. Nevertheless, the country continues to face significant development challenges, including high poverty rates, substantial infrastructure deficits, growing security spending pressures, and declining external assistance. Domestic revenue and spending on health and education remain among the lowest in the world.
- Somalia has made remarkable progress in rebuilding fiscal institutions and economic governance under exceptionally difficult circumstances. The next stage is to translate these gains into stronger domestic revenues, better value from public spending, and improved services for citizens, while preserving fiscal stability in a lower-aid environment.Hideki MatsunagaWorld Bank Group Country Manager for Somalia
The PFR finds that domestic revenue mobilization remains Somalia’s most pressing fiscal challenge. Despite recent improvements, domestic revenues remain too low to finance core state functions and development needs. The report highlights opportunities to strengthen customs administration, modernize legal framework, improve compliance, broaden the tax base, and expand the use of digital revenue administration systems.
A second major finding is that stronger fiscal cooperation across levels of government is central to Somalia’s broader development trajectory. While the Federal Government collects approximately 71% of domestic revenues, Federal Member States and local administrations play an important role in delivering frontline services. Stronger intergovernmental fiscal arrangements and better coordination across levels of government will be essential to improving equity, expanding service delivery, and strengthening state capacity across the country.
To support Somalia’s transition toward greater fiscal sustainability, the report identifies five priorities: strengthening domestic revenue mobilization, improving expenditure efficiency, managing fiscal and debt risks, enhancing public financial management and accountability, and advancing fiscal federalism to support more effective and equitable service delivery.
The potential gains from these reforms are substantial. According to the report’s simulations, such reforms could increase GDP by 9.3 percentage points compared to the baseline, raise domestic revenues by 6 percentage points of GDP, create more than 54,500 new teaching jobs, improve employment opportunities for roughly 250,000 higher-productivity jobs, and reduce poverty to 47% by 2033.
By strengthening fiscal sustainability, improving efficiency of public spending and enhancing cooperation across all levels of government, Somalia can build a stronger fiscal foundation for sustained growth, more jobs, better services, and greater opportunities for future generations.
