1. 2019 Budget forecast compared to 2018 Budget forecast and the Actual 2018 revenue collection

The 2019 resource envelope is forecast to be 1,831 Billion SLShs which is 9% higher than the 2018 forecast but is 19% higher than the Actual amount of revenue collected in 2018. Tax revenue is by far the biggest contributor to the government’s resource envelope as shown in Figure 1. In 2019, it is expected to make up 83.59% of the total revenue forecast; Non-tax revenue and grants are expected to contribute 13.72% and 2.69% respectively.

Figure 1: 2018 & 2019 Budget Forecasts and 2018 Actual Revenue Collection

While similar patterns can be observed between the 2019 and 2018 revenue forecasts as shown in figure 1 above, it is important to note that the Actual revenue collected in 2018 was 8.65% below forecast. Tax revenue, Non-tax revenue and Grants all under-performed against their respective forecasts by 3.99%, 25.74% and 31.31%, respectively.

Given the importance of Tax revenue, figure 2 below shows the contribution of each category of Tax on the overall Tax collection. As the figure shows, most of the tax revenue comes from international trade; in 2019, it is forecast to contribute to 52.9% of the expected tax revenue collection. Goods and services tax is expected to be the second highest contributor at 32.17% while Income tax and other taxes are expected to come at 9.94% and 5% respectively. In 2018, all four tax categories under-performed against their targets by 10,92%, 1%, 3% and 7% for Income tax, Goods and Services tax, International trade and other taxes respectively.

Figure 2: 2018 and 2019 Tax Revenue Forecast by Category (%)

  1. Customs and Inland revenue Departments’ revenue forecasts for 2019 compared to 2018

Most of the government revenue is collected by the customs and Inland Revenue departments as shown in figure 3. The Customs department is by far the biggest collector and this is not expected to change given that about 68% of the revenue forecasted to be collected in 2019 is expected to come from there. About 22% is forecasted to come from the Inland Revenue department. Interestingly, the forecasted amount projected to come from IRD in 2019 is 51% higher than the amount forecasted in 2018. For Customs, the 2019 forecast is 12% higher than the 2018 forecast. Note that, IRD outturn in 2018 was 4% lower than the forecast while the one from Customs was 8% below target.

Moreover, as shown in figure 4, approximately 67% of the Customs revenue is expected to come from Berbera and about 16% is to come from Gabiley. For IRD—as can be expected—about 78% of the revenue is projected to come from Hargeisa and 14% from Berbera.

Figure 3: 2019 revenue forecast vs 2018 forecast & actual from Custom, IRD And other collecting agencies

Figure 4: 2019 Customs and IRD collection by location