PFM Act

The Public Financial Management Act (2018) establishes the legal and institutional framework governing the management of public finances in the Galmudug State of Somalia. It defines the systems, responsibilities, and procedures required for the effective planning, allocation, utilisation, control, and reporting of public resources, ensuring alignment with principles of accountability, transparency, and fiscal discipline.

The Act applies to all branches of government, including the Executive, Legislature, Judiciary, autonomous agencies, state-owned enterprises, and any entity that utilises public funds. It introduces a unified approach to public finance management centred on the Consolidated Fund, into which all government revenues are deposited and from which all expenditures are executed. This ensures comprehensive oversight and control of public financial resources.

Core principles guiding the Act include accountability of public officials, annual budgeting, balanced fiscal management, comprehensiveness of revenues and expenditures, transparency in reporting, and the unity of the budget as a single authoritative financial instrument. These principles underpin the design and execution of the public financial management system.

The Act clearly delineates institutional roles. The President provides overall policy direction, while the Minister of Finance is responsible for technical oversight, including budget preparation, execution, financial reporting, and asset management. Parliament exercises legislative authority through budget approval and oversight functions, ensuring that public funds are utilised in accordance with approved appropriations.

A structured budget cycle is established, covering preparation, submission, approval, execution, and review. The Act mandates medium term fiscal planning, detailed budget documentation, public access to budget information, and provisions for supplementary budgets and contingency funding. Budget execution is governed by strict controls on commitments, procurement, reallocations, and expenditure limits.

The framework further strengthens financial governance through provisions on cash management, including the adoption of a Treasury Single Account approach, standardised accounting practices aligned with international standards, and regular financial reporting requirements. Quarterly and annual reporting obligations ensure timely monitoring of fiscal performance.

The Act also introduces robust mechanisms for internal control and audit, assigning responsibility to institutional leadership while reinforcing the role of internal auditors and the Auditor General. In addition, it provides for the management of public debt, government guarantees, donor funding, and the financial oversight of state-owned enterprises.

Overall, the Act serves as a comprehensive legal foundation for strengthening public financial management in Galmudug, promoting fiscal responsibility, enhancing transparency, and supporting effective service delivery through disciplined and accountable use of public resources.