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2019 Puntland Post Monthly

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2019 Puntland Post Monthly 01/12/2019 Volume 1 Issue 3 Puntland Post Monthly IS THE TIME RIPE TO REVIEW PUNTLAND INSIDE THIS ISSUE PUBLIC FINANCES? By Farah B. Osman I have watched a session at Puntland Parliament in which MPs asked the Finance Minister, Hassan Shire Abdi, questions about the 2019 budget unveiled in November. 1. Is the Time Ripe to Review The Minister has given an excuse for not being able to answer questions about the new budget. He said that he Puntland Public Finances? 2. Consumer Price Index for had no a clue as to how the budget had been prepared. Puntland State of Somalia I have studied the new budget. Since 2020 is just around 3. Puntland Security Reform is the corner. Puntland parliament has passed the budget. Long Overdue My discussion will revolve around three aspects of the 4. Africom Counterterrorism budget. Strategy in Somalia Mired For a comparison reason my analysis will partly rest on the in Geographic Absurdities temporary budget passed in April 2019. The total of the 5. Letters to the Editor monthly revenues forecasted was US$ 14.78 million ( US$ 6. Lasanod Municipality 133.03 million for nine months ending December 2019.). Arbitrates a Tricky Land US$ 6.06 million of the forecasted revenues were Dispute Case domestically generated. US$ 8.15 million was external 7. Guurti Buys President Bihi a revenues, whereas US$ 583, 000 is forecasted revenues Period of Political Stability from generated local governments. There was no a 8. Othering Somali Citizens subsidy from the Federal Government of Somalia. 9. We Are All Others Incremental approach has been used to prepare the budget. Hence there is marked overstatement to offset expenditures – a reason the Finance Ministry of Puntland has adopted expenditures approach in the course of preparing the new budget. 1. Budgetary imbalance: Expenditure allocations within budget items Domestic revenues forecasted for nine months ( April – December ) amounts to US $ 54 million. Forecasted expenditure is based on the forecasted revenues. US$ 48. 9 million had been allocated to cover salaries and fringe benefits, services equipment and sundry expenses. Continued on page 2, column 1 · The monthly domestic and government expenditure noted it foreign travels of the Finance as general expenditure, unlike From page 1 Ministry is US$ 70,000, that is recurrent expenditure. It does From the above data one can 50% more than the total not get channeled through the infer that 89.9% of domestic domestic and foreign travels of bank of the government. In revenues get incurred as the rest of the government addition, there is no an official expenditure. 11% of the total agencies (US$ 35,700) . report on donations Puntland expenditure will go to public Forecasted hospitality receives. It is the remit of the services. Ministries that directly expenditure at the Presidency Auditor General to publish a contribute to the economy – stands at US$ 112,625 per report on donations that Ministry of Livestock, Ministry of month that is 16% more than the Puntland receives. Agriculture, Ministry Commerce, general expenditure for the Ministry of Tourism, and Ministry judiciary of Puntland. 3. How Puntland Public Finance of Ports – have not been given a · Expenditure for publicity Authorities Work share in the public service and advertisement for the budget allocation. Youth Finance Ministry amount to US$ organisations, women’s 40,000 per months compared to The management of Public organisations, cultural and US$ 30,200 earmarked as Finance Agencies consist of sports activities have not monthly expenses for the Office agencies independent of each received budget allocations in of the Auditor General. More other but that collaborate. the new budget. than forty people are on the Puntland public finance payroll of the Auditor General’s agencies are the Ministry of office. Finance, the Government Bank, the Accountant General and the · Recurrent expenditure 2. Lack of clarity in the budget Office of the Auditor General. estimates of government · Puntland Public Finance organisations stands at US$ · The budget allocation for Authorities are fully formed 6.05 million per month, 41.3% of Puntland Dervish Forces organisationally but their work is which has been allocated to the amounts to US$ 1.39 million, not balanced. This has caused Presidency and the Finance making the Force second collective poor performance, Ministry. Forty organisations of organisation to have with the Accountant General Puntland State share the received generous and the Office of the Auditor remainder. appropriations next to the General bearing the brunt of · Allowances outside Finance Ministry. However, underperformance. salaries and non-monetary repeated mutinies of the Dervish benefits granted to the Finance forces raise questions about Ministry and Presidency amount how Puntland government pays The World Bank funds Capacity to US% 653, 430 ( for nine salaries of soldiers. Injection Project and Somalia months). This allocation dwarfs · Included in the general PPF Capacity Building. Those US$ 575, 000 – the total budget government expenditure is US$ projects help Puntland of nine months for the Ministry of 8.155 million classified as modernise its public finances Justice, Ministry Livestock, the external revenues. This income processes. The World Bank Office of the Auditor General, consists of donations from commits US$ 11 million per and the Office of the Attorney international organisations and annum. However, public finance General. the World Bank. The forecasted system of Puntland 2 | Punland Post Monthly 1/12/2019 | Issue Number: 03 predominantly uses paperwork. A Closer Look of Consumer As shown in Figure 1, for the month Puntland has not fully Price Index (CPI) for Puntland of October 2019, overall, the CPI transitioned its public finances State of Somalia was up 0.2 percent compared to system into an electronic 0.8 percent for the month of system. With those projects By Abdighani H. Hirad September. The monthly change, which is a measure of inflation, nearing completion, how Consumer price indices are appears to be stable from month to Puntland has benefited from the important to the development of a month. timely financial and technical country. The Puntland State of assistance of the World Bank is Somalia (PLS), a regional Major contributors of the increase a question worth administration which is a member from September to October were: asking. state of the Somalia Federal Recreation and Culture with an Government (FGS) has developed a increase of 3.8%, followed by monthly Consumer Price Index Communication (+3.6%), In conclusion, transparency, (CPI). The CPI is published by the Education (+2.6%), Alcoholic monitoring and accountability Ministry of Planning and Beverages, Tobacco & Narcotics are necessary conditions for International Cooperation (MoPIC), (+1.9%), Health (+0.8%) and Food good governance. The time is Department of Statistics for and Non-Alcoholic Beverages ripe for a conversation about the Puntland. state of public finances in (+0.5%). As noted in MoPIC’s website, “CPI Puntland. In addition, major areas of is obtained by comparing through decrease for the same period were: Farah Bashir Osman is co- time, the cost of a fixed basket of founder of Haldoor Forum. commodities purchased by Transportation and Restaurants His commentaries have consumers.” The Consumer Price and Hotels which had the largest appeared in major Somalia Index (CPI) October 2019 was decrease of 1.3%, followed by news websites. recently published by the Housing, Water, Electricity and Gas Department and it shows the (-0.6%) and Clothing and Footwear Advertise with Puntland Post changes for various components (-0.3%), which as noted by PL Monthly and Puntlandpost.net. of the CPI, as depicted in the MoPIC, led to a muted and flat following chart: result at the All Groups CPI level. For rates please email: Chart 1: Change in the Price Indices Chart 2: All Groups CPI - [email protected] for October 2019 for Puntland Combination inflation rate and index graph 3 | Punland Post Monthly 1/12/2019 | Issue Number: 03 Chart 2 illustrates year-over-year influenced by the importation of the overall development of the inflation rate (left axis) and all fuel and other lubricants. Somali in rebuilding its financial group CPI (right axis). Puntland Chart 3: CPI Index for Somalia institutions. appears to be experiencing increased inflation rates in 2019 Abdighani H. Hirad is an compared with prior years of 2018 economist and statistician, a and 2017 as shown in the Figure 2. member of American Statistical For example, the yearly inflation Association and Southern rate for October 2019 was an Economic Association. increase of 14.1 percent (74.1 in October 2018 and 84.6 in October _____________________________ 2019) compared with a decrease of 15.2 percent in October 2018. This is a great cause for concern and inflation rate at this rate is unsustainable, in the long run. While a regional state such as PL with meager resources and nascent economy might not have inflationary rate policy, a NECSOM is a Somali utility symmetric 2 percent objective is company founded in 2003. It generally a good rate to maintain supplies Garowe, the Compared with overall Somalia for a healthy economy. administrative capital of Puntland (as depicted at chart 3), the round-the-clock electricity. As noted in MoPIC October Report, inflation of Puntland appears to major contributors of significant be heightened. For example, the NESCSOM has partnered with prices increase were: Somali inflation was reported to utility companies in Kismayo, Clothing and Footwear which be (over the twelve months to Bosaso and other towns in experienced a hefty increase of the month of October 2019) as a Somalia. 24.2% followed by Transportation decrease of 4.15 percent. Several years ago, NECSOM (+20.7%), Alcoholic Beverages, Again, this could be due began to utilise solar and wind Tobacco & Narcotics (+18.6%), transitional measurement Health (+18.0%), Housing, Water, energy to diversify its sources of unique to PL and not any Electricity & Gas (+17.1%) and energy.
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