Transforming Somalia’s Public Financial Management: Reforms, Federalism, and Economic Resilience in a Post-Conflict State

Somalia’s public financial management (PFM) reforms over the past decade illustrate the challenges and opportunities of rebuilding state institutions in a post-conflict context. This study examines the evolution of PFM reforms in Somalia from their formal initiation in 2013 to 2024, focusing on governance enhancements, fiscal federalism dynamics, the adoption of digital financial tools, alignment with international best practices, and the economic impacts of these reforms. A mixed-methods approach is employed, combining qualitative analysis of policy documents and literature with quantitative examination of fiscal data. The findings show that Somalia has made notable progress in establishing a PFM legal framework (including a 2019 PFM Act and related laws), implementing financial management information systems and a Treasury Single Account, and adopting international standards like the International Public Sector Accounting Standards (IPSAS) . These reforms have improved fiscal discipline and transparency, evidenced by the publication of audited federal accounts and a rise in domestic revenue collection. However, Somalia’s PFM system continues to face significant challenges: intergovernmental fiscal arrangements remain only partially resolved, domestic revenue is low at about 5% of GDP, and capacity constraints persist at sub-national levels. Comparative analysis with other post-conflict countries (e.g. Afghanistan, Liberia, Sierra Leone) indicates that sustained political commitment—often driven by external incentives such as debt relief—and a focus on basic PFM controls have been essential to progress. The discussion highlights policy implications for Somalia, including the urgent need to formalize fiscal federalism agreements, strengthen accountability institutions, and ensure PFM reforms translate into improved public services. The paper concludes with recommendations to consolidate gains (such as broadening the tax base, enhancing budgetary oversight, and leveraging digital tools for efficiency) and outlines priority actions to achieve a resilient, transparent, and inclusive PFM system that can underpin Somalia’s broader state-building and economic development goals.