This study investigates the limitations in Somalia’s federal budget formulation and approval processes, focusing on how institutional capacity, political dynamics, donor conditionalities, and participatory deficits interact to shape fiscal outcomes. By analyzing stakeholder perspectives and procedural frameworks, the study identifies the governance and institutional bottlenecks that hinder effective budget management.

This study concludes that Somalia’s federal budget formulation and approval processes, while legally sound and procedurally compliant with the Public Financial Management Act (2019), remain substantively weak, highly centralized, and externally driven. The findings reveal a persistent gap between formal PFM architecture and its practical implementation, where compliance with donor frameworks has taken precedence over national ownership, inclusivity, and accountability.

The formulation stage remains dominated by a small technocratic circle within the Ministry of Finance, with limited participation from line ministries, civil society, and subnational actors. Donor-influenced fiscal calendars and conditionalities, particularly those linked to the IMF and World Bank programs, have reinforced a top-down approach, compressed timelines, and narrowed the policy space for domestic priorities. As a result, Somalia’s national budget functions more as a compliance document aligned with external benchmarks than as a strategic policy instrument for advancing the country’s development agenda.

Public participation, though recognized in principle, remains symbolic in practice. Consultations with civil society and citizens are ad hoc, donor-induced, and rarely influential in shaping allocations. The absence of a legal framework mandating participation has allowed inclusivity to depend on administrative discretion rather than institutional obligation. As a result, citizen voice remains marginal, weakening public trust and undermining the budget process’s fiscal legitimacy.