Joint statement issued by the ministries of finance of the states of the federal republic. They stopped working with the Ministry of Finance and severed their relationship.
The statement said that the five regional state agreements that took place in Addis Ababa, Kismayo, Kampala, Nairobi and Mogadishu, were broken by the ministry and therefore, the cooperation was stopped.
What were the deals?
The World Bank, the IMF have challenged the unification of taxes, the accounting should be transparent and submitted to the Ministry of Finance and available at any time, and these agreements were part of the debt relief program known as HIPC (Debt Relief Under the Heavily Indebted Poor Countries) reached the good level.
Read: Somalia’s president Hassan Sheikh history of corruption 2012-2017
Read: Somalia’s president Hassan Sheikh history of corruption 2012-2017
Fiscal federalism
Federalism is the basis of the financial system and taxes and all these agreements were called the unification of taxes in the country and the same rate is charged, so that the goods that cross the states are not taxed, and among these agreements were the taxes called excise. The tax on cigarettes and drug trade with Kenya miraa khat, which is more than usual, was the only one that came into effect.
One of the agreements was how to share the country’s resources, which are shared between the federal government and the regional governments of the federal republic.
Read: Somalia’s president Hassan Sheikh history of corruption 2012-2017
What is there now?
The Ministry of Finance of the Federal Government has received $100 million from the World Bank to support the country’s budget, or as a budget subsidy, the regional governments want at least 50% of this money to go to them because they control most of the country, but the government of Hassan Sheikh Mohamoud the president who wants to use this $100 million for the activities of the government based in Mogadishu, and to cool themselves down, as the transition period between two administrations has coincided.
Some of the five agreements stipulated that the budget subsidy of the Ministry of Finance of the federal government should be distributed to the regional governments.
Therefore, this is the case for all the regional governments, some of which were directly dependent on the funds from the federal government based in Mogadishu.
Did Hassan Sheikh destroy the regional governments?
President Hassan Sheikh took office while three regional governments were directly linked to the previous government, while Puntland and Jubaland were in opposition.
It is evident that he did not take over even the three imprisoned in Mogadishu who lost their support, after the establishment of the government which some saw as a dangerous message sent to them.
This issue sends an urgent message to the international community that supports Somalia in terms of the budget, and the government will have to hold an emergency meeting soon to distribute the $100 million that the federal government has deposited. and corrupt Hassan Sheikh and his cronies will deposit private banks instead giving Somalis who need it most.
The joint statement comes as President Hassan Sheikh returned from Garowe, where he stayed for four nights, and visited the Puntland Ministry of Finance and the Puntland Bank.