Hassan Sheikh announces a 40% drop in revenue from the federal government...

New York (Caasimada Online) — The domestic revenue that Somalia receives from customs duties has decreased by approximately 40%, after disruptions in the Hormuz waterway affected trade and increased import costs, President Hassan Sheikh Mohamud stated.

The President, who delivered a speech on Thursday at the United Nations General Assembly, noted that Somalia's reliance on imports from the Middle East has particularly exposed the country to disruptions occurring in this vital trade route.

“The disruption has also caused our domestic revenue based on customs to decline by approximately 40%,” said Hassan Sheikh.

He mentioned that customs revenue is an important source for funding economic reforms, growth, and efforts to reduce poverty.

The President did not specify the duration over which this 40% estimate applies, nor did he provide detailed figures showing the level of customs revenue before and after the decline.

Hassan Sheikh also stated that the disruptions in the Hormuz waterway have raised the prices of food and fuel, inflation, transportation costs, and insurance for goods imported to Somalia.

“Ensuring free and fair movement in that waterway is crucial for protecting vulnerable economies like Somalia,” he said.

The impact of imports

The new estimate provided by the president follows earlier data presented by the Somali government, which showed the impact of the Hormuz crisis on the country's economy, which is heavily reliant on imports.

A report submitted by the national statistics agency to the Council of Ministers in May indicated that the volume of goods entering Somalia had decreased by nearly 40% during the Hormuz crisis.

The government also stated that this situation had caused food prices to rise by 10%, while healthcare service costs increased by 14%, with other goods recording even higher increases.

The Council of Ministers then instructed the relevant government agencies to take measures to alleviate the economic burden on the public.

Somalia imports a large portion of its food, fuel, and other essential goods, which makes families and businesses directly feel the increase in shipping costs and disruptions in global supply chains.

The impact is not limited to the prices of goods alone, but it has also reached the government’s economy.

Taxes collected on goods passing through ports and other entry points into the country are a significant part of the federal government's domestic revenue, which funds services and government expenses.

When imports decline, customs revenue also decreases, while transportation and insurance costs continue to drive up the prices paid by consumers.

} President Hassan Sheikh stated that the government continues its efforts to increase domestic revenue, despite the external economic pressures.

He told the United Nations General Assembly that Somalia has strengthened public financial management and budget transparency, while also expanding the financial system and striving to improve the investment climate.

The President indicated that Somalia's economy is expected to achieve real growth of 3.1% this year, despite significant impacts from the global economy.