In the first quarter of 2011 the state budget recorded a surplus of Som1.5bn (US$31.6m), compared with one of Som1.1bn in the year-earlier period. The surplus amounted to 3.2% of first-quarter GDP, up from 2.8% in January-March 2010. The budget for 2011, which was approved in March, sets the full-year deficit at Som13.3bn (US$28m). Revenue is targeted at Som68.8bn, compared with Som58bn in the 2010 outturn. Expenditure is set to reach Som82.1bn, an increase of 19% on the 2010 outturn. However, grant expenditure from the public development programme will push overall spending up to Som90.1bn.

Revenue from personal income tax is expected to be almost 14% lower than in 2010, as the government increases exemptions in order to reduce economic hardship. However, this is likely to be offset by a rise of almost 21% in revenue from profit tax and a 29.5% increase in value-added tax (VAT), as business activity rebounds in line with the economic recovery. Expenditure is likely to pick up later in the year as government institutions rush to use up their spending allocations.