10 May To what extent is the Ethiopian fiscal federalism decentralized in experience of Ethiopian fiscal federalism is associated with equal access. An Economic Analysis of Fiscal Federalism in Ethiopia. Abu Girma Moges. Northeast African Studies, Volume 10, Number 2, (New Series), pp. Fiscal Federalism in Ethiopia. Yalew Abate (). Speaker, House of Federations. Federal Democratic Republic of Ethiopia.

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Unconditional grants fiscal federalism in ethiopia usually general purpose grants aimed at addressing vertical imbalances. The government has increased its appetite for borrowing from foreign sources to bridge the gap and when external borrowing does not satisfy it resorts quite easily to borrow from the fiscal federalism in ethiopia banking sector. Even in non-federal states, there has been a growing movement towards greater fiscal decentralization in recent years.

A longer view of the fiscal resource allocation behavior of the government, despite marginal changes in some fiscal federalism in ethiopia of the fiscal components, suggests that there has not been enduring and significant shift in ethiopua over the past two or so decades.

As a subfield of public economics, fiscal federalism is federalidm with “understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government”.

The horizontal structure outlines the nature of ehhiopia across cross-sections of government levels. As far as collection of the revenues goes, the regional feeralism collect their own revenues whereas the Federal Government collects not only its own revenues but also the joint revenues, of course with a possibility of delegation whenever deemed necessary.

There could be contexts where the common decisions of the two become vital to ensure maximum benefits in a particular area. Introduction A growing number of countries have fiscal federalism in ethiopia fiscal federalism in an effort to improve the performance of their public sector.

It may be noted that the ideas of fiscal federalism are relevant for all kinds of government, unitary, federal and confederal. An Economic Analysis of Fiscal Federalism in Ethiopia Abu Girma Moges Introduction A growing number of countries have adopted fiscal federalism in an effort to improve the performance of their public sector.

Nonetheless, the financial and manpower resources of the regions are very limited. If the lower level of government is to fiwcal this type of transfer, it must agree to the spending instructions of the federal government.


The ethnic groups are represented at fiscal federalism in ethiopia institute.

This experiment has been formalized in the Constitution. The long statehood history of Ethiopia is known for its decentralized governance system with many autonomous regions and principals ruled by hereditary regional chiefs under various titles, but accountable to King of Kings at the centre. The respective constitution of the various regional states stipulates fiscal federalism in ethiopia the State Councils are entrusted with the power of forming the Executive Fiscal federalism in ethiopia, which is the highest state-level executive organ.

First, fiscal federalism in ethiopia the legislative assignment of taxes, the actual potency of the tax network depends on the nature and development of the national economy, the relative distribution of economic activities across jurisdictions, and the administrative efficiency of the taxation system. In other words, it is the study of how competencies expenditure side and fiscal instruments revenue side are allocated across different vertical layers of the administration.


This leads us to the study of the implementation of financial aspects of federalism, in short: Fourth, the process of adjusting the imbalances and establishing a meaningful relationship between the tiers of government, both of which are indispensable for a fiscak federal system.

This study examines not only the regime of fiscal federalism proper in Fiscal federalism in ethiopia but also seeks to indicate the need to avert the perils of the ethnic-based federal system. The main features of fiscal aggregates of Ethiopia suggest that either the government is not willing to ehtiopia change its fiscal policy stance or the fiscal system is governed by the structural fiscal federalism in ethiopia of the economy that are not easily amenable to change in response to fiscal policy reforms.

It is an important predictor of a looming crisis. The century old exclusive, suppressive and highly centralized governance system came to feseralism in and a multi-ethnic federal arrangement has been adopted.

Fiscal Federalism in the Ethiopian Ethnic-based Federal System

The country has become increasingly dependent on foreign aid and borrowing to finance its consumption and investment expenditure. The theory of fiscal federalism does not provide a clear-cut separation of fiscal responsibilities that would promote economic efficiency and resource distribution.

The joint revenues are listed in Article 98 of the FDRE Constitution as constituting profit, sales, excise and income taxes on enterprises jointly established by the Federal and State governments; profits of companies and dividends of shareholders; and income and royalties derived from large-scale mining operations and all petroleum fiscal federalism in ethiopia gas operations.


It drafts, approves and manages fiscal federalism in ethiopia regional budget. In the context of fiscal policy, the reforms entail decisions in identifying the optimal distribution of functions and powers between federalismm federal and subnational governments and providing fiscal decision-making power to subnational governments.

Project MUSE – An Economic Analysis of Fiscal Federalism in Ethiopia

A conditional transfer from a federal body to a state, or other territory, involves a certain set of conditions. This website uses cookies to ensure you get the best experience on our website. Such transfers of revenues usually fall under three categories: The federal executive power is vested in the Prime Minister and in the Council of Ministers which are politically accountable to the House of Peoples’ Representatives in all the decisions it adopts.

The average tax revenue for the period was about The level of deficit has increased so much so that in recent years it has been as much as the total tax revenue collection of the government. The current government in power, except some marginal changes, shares important characteristics and behavior in fiscal policy with its predecessor. Ethnical conflicts and boarder disputes are referred to the House of Federation. An important aspect of the exercise of fiscal federalism is the assignment of fiscal functions to the federal and fiscal federalism in ethiopia sub-national governments fiscal federalism in ethiopia the appropriate means of financing these responsibilities.

The regional states have their respective autonomous governments fiscal federalism in ethiopia up. However, the constitutional provisions operate with political centralism that has remained to be the distinguishing feature of the current political system.

As far as the current system of fiscal federalisms and division of revenues in Ethiopia goes, the FDRE Constitution provides that the Federal Government and the States all collect taxes and shall share revenue, taking the federal arrangement into account.

The argument is based on the reasoning that lower levels of government have limited capacity and policy instruments to provide stabilization and redistribution functions. The State Administration enforces, as appropriate, the policies, proclamations, regulations, plans, guidelines fiscal federalism in ethiopia decisions of the central government and of the State Council.