|
The Oromia and Amhara Regional States last week on
Friday approved a 6.9 billion Br and 4.19 billion Br
budget, respectively. The Federal Budget subsidy
accounts for a large portion of these budget.
From the total budget the Oromia finance authorities
endorsed in Adama (Nazareth) on July 18, 2008, 5.5
billion Br is expected to be covered by federal
subsidies, while the balance would come from grants
and loans to the region. Oromia plans to spend 3.8
billion Br of the allocated budget for urban and
rural development.
The Amhara Regional State also expects 4.1 billion
Br in federal subsidies, while the balance would be
sourced from loans and grants.
The Federal Government has approved a record high
54.9 billion Br budget for the next budget year, of
which 16.4 goes to regions in the form of subsidies.
This is a 2.2 billion increase compared to the
current fiscal year.
The major beneficiaries of the budget are Oromia
(33.5pc), Amhara (26.4pc), and the Southern Nations
Nationalities and Peoples Regional State (20.8pc).
The Tigray Regional State follows the three with
6.41pc.
From the peripheral regions, the Somali Regional
State has the largest slice (6.73pc), while Afar
trails with 2.56pc. The Benishangul-Gumuz (1.5pc),
Gambela (0.98pc), Dire Dawa (0.68pc) and Harari
(0.52pc) follow in the respective order.
Federal subsidies were allocated to the regional
governments on the basis of size of population
(65pc), ability to spend (25pc), and capacity of
revenue collection (10pc). Peripheral regions were
also awarded five percent in a bid to compensate
them for their disparity in growth.
Neverthless, after 12 years of deliberation on the
best possible way to reform this formula, the House
of Federation introduced a new formula developed by
Getachew Gebre, former head of the Public Finance
Supervising Agency, and copied from Australia.
The now challenged but operational formula was
approved by the House in September 2007. Its
parameters include performance in revenue
collection, and expenditure, which least developed
peripheral regions argue would impede them from
securing enough cash. This would give these regions
a lower share of the percentage from the budget as
opposed to the bigger regions.
Although the recurrent income and expenditure of the
Amhara Region has increased, the income has not been
able to cover the expenditure. For instance, the
region’s 100,344 million Br recurrent income in 1993
grew to 457,890 million Br in 2007. However, the
expenditure in 2007 was over two billion Br.
Although the region has undertaken various measures
to balance the two, the gap is still very wide.
|
