Honorable Leader and fellow Ministers, it is a great honour for me to present to you the Jubbaland State of Somalia’s half year Budget from 1 July 2014 to 31 December 2014.
Honorable Leader and fellow Ministers, this is a budget prepared to establish and begin the operations of the JSS. This is a major step forward for Jubbaland as we all work together to help build a peaceful and prosperous future for Somalis.
The budget is based upon an objective analysis of initial priorities, focusing on establishing the core ministries: the Ministry of Finance; the Ministry of Interior & Internal Security; the Ministry of Justice and Religious Affairs; and, the Ministry of Planning & International Cooperation.
It is the core government functions of security, justice and finance on which we place emphasis in this formative stage in the life of the JSS. In establishing these functions, we will begin work, together with our friends and colleagues civil society and the private sector, to establish sustainable and lasting stability in Jubbaland.
Honorable Leader and fellow Ministers, this budget paves the way for building a better future for the people of Jubbaland. However, our work has only just begun. Already my Ministry is working on preparing the budget for 2015 which will move us beyond the set-up and stabilization phase and on to bringing stability and day-to-day delivery of public services to the citizens.
Honorable Leader and fellow Ministers, allow me to summarize the key features of the 2014 Budget.
This, our first budget, recognizes that our resources are, initially at least, limited. The JSS must, from the very beginning, avoid falling into the trap of large deficits and dependence on external financing that can prevent us from our ultimate goal of sustainable peace, prosperity and self-reliance. We will, of course, need some external financial support in the first years, to deliver on our immediate goals to bring stability and decent living conditions to Jubbaland, but we will also begin work immediately to develop our own domestic revenue sources to guarantee our fiscal independence in the longer-term.
Therefore, this is a conservative budget reporting a deficit of $1,563,081, with revenue funding JSS’s recurrent and capital expenditure. Where feasible we will seek to enhance our revenue raising capacity and to garner donor support for development programs in addition to support for our operational needs.
Honorable Leader and fellow Ministers, Revenue estimates for the 2014 half year is $6,030,219. Currently, our major revenue source is the collection of custom duties & other taxes, representing 79% of the total. Though this budget period will be affected by the monsoon, in order to ensure a continued revenue stream, we are working actively to raise awareness that large ships can still visit our port during this time.
Honorable Leader and fellow Ministers, the recurrent expenditure budget has been prepared based on urgent needs to establish and commence normal operations of core Ministries. This includes expenditure on items such as staff salaries, office stationery, fuel, telecommunications, office equipment and staff recruitment.
The recurrent expenditure budget comprises seven main expenditure groups:
- Wages & salaries: wages & salaries and allowances
- Travel & conferences: internal & external travel and conferences
- Operating expenses: utilities, telecommunication, materials & supplies, maintenance and other services
- Other operating expenses: administrative, advertisements & subscriptions and insurance
- Grants to other general government units
- Miscellaneous other expenses
The wages and salaries budget is $5,917,250, representing79% of the recurrent budget. The major drivers of this expenditure will be the Ministry of Interior & Internal Security and the Ministry of Justice & Religious Affairs. Our ability to honour our financial obligations to security personnel, as well as recruiting of judges and justice sector personnel, is critical to our goal of bringing safety and security under the rule of law to Jubbaland.
The Ministry of Finance is also recruiting staff to implement the public financial management system to accurately record all JSS revenues and expenditures, and to produce proper financial reporting for the JSS in line with international standards. The professional management of JSS resources is critical to our goal of establishing a sound administration to deliver services to the people at a sustainable cost.
The budget for travel& conferences is set at US$ 180,000, to enable government officials to conduct their work and fulfill their administrative duties within Jubbaland, as well as to represent Jubbaland and pursue its interests elsewhere in Somalia and internationally.
The operating expenses budget will cover basic expenditure required to commence basic government operations. It is composed of utilities costs, provision for maintenance of vehicles, equipment and a building maintenance budget of $160,000 for all ministries and agencies.
The other operating expenses budget includes consultation fees of $42,000, for three of the core Ministries: Ministry of Interior & Internal Security, Ministry of Justice &Religious Affairs and Ministry of Planning and International Cooperation.
The budget also provides for grants to other general government units in relation to the remittance to districts of revenues collected on their behalf.
The miscellaneous expenses budget covers payroll tax, calculated at 5% of the salary and wages budget. The corresponding revenue is recorded in the Ministry of Finance’s revenue budget.
In accordance with Section 13 of the Public Financial Management Decree 2014, the 2014 budget includes a contingency fund of $301,511, which is 5% of total budgeted revenues. The contingency fund is in place cover urgent and unforeseen expenditures arising from emergency situations for which payments cannot be postponed until the passage of a supplementary budget or the next annual Consolidated Budget without seriously affecting the public interest.
Overall the recurrent expenditure budget represents a very conservative recurrent budget consistent with our revenue raising capacity. Our revenues are expected to be sufficient to cover 80% of our recurrent expenditure.
Honorable Leader and fellow Ministers, the capital expenditure budget, totaling $85,780, is also conservative, with provision only for essentials such as IT equipment and furniture for each Ministry.
Honorable Leader and fellow Ministers,the challenge we now face together is the effective implementation of this budget. We need all our ministries and agencies to work their hardest to ensure effective and efficient implementation of the 2014 Budget, culminating in the publication of financial statements early in 2015. This is not simply a technical matter. The eyes of our citizens and all of Somalia are upon us and we must prove to them that we are a responsible government that delivers services and development to its citizens in return for taxes collected fairly under the law.
If we move forward in this professional and transparent way, I believe we can also count on financial support from international donors to assist us on our first steps on the path to stability. Our citizens long for peace and the opportunity to thrive under a rule of law that guarantees basic rights and freedoms. I am truly proud to have been tasked by the Leader to present this, our first budget, to the Council of Ministers and to be part of the greater endeavour to build Jubbaland from the ground up.