Ethiopian House of Federation to Revise Budget Subsidy to Regions

By Staff Reporter

Keria-Ibrahim-SubsidyMay 13, 2019 ( -- The Ethiopian House of Federation is to revise the existing budget subsidy allocation formula in which regional states receive finaicial support from the federal government.

The existing budget formula, which has been in place for the last 22 years, was supposed to be revised in 2016. However, the revision was not made due to the controversy over the exact population size of the regions and other related matters.

On september last year, the house of federation approved a resolution providing for revising the formula following requests from regional governments.

"The existing  budget subsidy allocation formula lacks fairness and  clarity and should be revised based on right principles, " Keria Ibrahim - Speaker of the house of federation has said.

According to the speaker, the existing budget subsidy allocation formula was based on requirments set 22 years ago and how the subsidies have been adminstered were unclear.

The existing budget subsidy allocation of budget subsidies to the regional states, which sometimes is called unconditional budget grants, has been developed based on the findings of a detailed quantitative assessment of the population size, the relative expenditure needs and revenue raising potentials of the regions. In an attempt to redress the imbalances among the developed and the less developed regions, one percent of the total subsidy budget was exclusively given to Somali, Benishangul-Gumuz, Afar, and Gambella regions.

"The formula needs to have legal framework and must be well-calulated," Keria claimed.

The revised formula which is under discussion among concerned stakeholders is set to be ready this month and expected to go into operational next Ethiopian budget year after it gets approval of the national parliament next month.



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