CHAPTER 12. FEDERAL MEMBER STATES
Article 120. Institutions of the Federal Member States
The establishment of the legislative and executive bodies of government of the Federal Member States is a matter for the constitutions of the Federal Member States.
Article 121. Principles for Constitutions
- Principally, the Constitution of the Federal Republic of Somalia and those of the Federal Member States shall be harmonized.
CHAPTER 13. PUBLIC FINANCE
Article 122. Principles of Public Finance
The Principles of the public finance will be discussed between the Federal Government and Federal Member State in accordance with the constitution.
Article 123. The Federal Central Bank
- A law passed by the Federal Parliament shall establish the Federal Central Bank of the Federal Republic of Somalia.
- The Federal Central Bank of the Federal Republic of Somalia shall be responsible for formulating and implementing financial policies and monetary policies and all the banks shall abide by the regulations set by the Federal Central Bank.
- The main functions of the Federal Central Bank of the Federal Republic of Somalia are to:
- Produce currency;
- Control inflation;
- Stabilize exchange rates; and
- Establish a sound banking system.
- The financial policy shall be based on the market forces and lending shall not be based on administrative decisions.
- The Federal Central Bank of the Federal Republic of Somalia has full authority to execute the monetary policy.
- The Federal Central Bank is the National Reserve Bank
Article 124. Federal Legislation on Financial Matters
A law enacted by the Federal Parliament shall provide the framework for financial management with the following characteristics among others:
- The preparation, timetable and procedure for presenting the budgets of Federal Member States and districts in a transparent, accountable and efficient manner;
- Guarantees by the Federal Government for loans raised by Federal Member States;
- Procedures which the Government will follow for public procurements;
- Auditing of accounts of non-governmental bodies that receive government funding; and
- General measures necessary for the implementation of this chapter.
Article 125. The National Treasury
- A law enacted by the Federal Parliament shall establish a national treasury. That law shall also determine legitimate revenue collection and expenditure disbursement relating to institutions at all levels within the Federal Republic of Somalia. That law shall be based on an accountability system that has been tested worldwide and is known to have standards related to financial reserve and expenditure that can equally be implemented in every part of the Federal Republic of Somalia.
- The National Treasury shall ensure the implementation of the principle stated in Clause (1) and it shall stop disbursement of funds to any government department that commits major violations or constantly violates the law of national treasury.