2000年-世界发展银行全球_Ethiopia___Public_Expenditure_Review_Volume_2_Appendixes_and_Statistical_Tables_67页_2mb

Ethiopia Public Expenditure Review Summary

Core Content

The Ethiopia Public Expenditure Review (PER), specifically Report No. 20810-ET, is a comprehensive analysis of the country's public expenditure management system, fiscal planning, and donor coordination. It covers a range of issues, including the implementation of the Medium-Term Expenditure Framework (MTEF), the Public Investment Program (PIP), and the Public Expenditure Program (PEP), as well as the challenges and progress in fiscal sustainability, aid management, and federal-regional fiscal relations. The review is divided into two volumes, with this summary focusing on Volume II, which includes appendices and statistical tables.

Main Recommendations and Status

1. Public Expenditure Management System (PEMS)

• Recommendations from Previous PERs:

  • Prepare a three-year MTEF to support future budget planning and ensure consistency between Sector Development Programs (SDPs) and the macroeconomic framework.
  • Better coordination between MTEF/PIP and SDPs, as well as with the Civil Service Reform (CSR) program.
  • Implement a clear and defined budget calendar to improve budget preparation and donor coordination.
  • Develop a more efficient budget coding system.
  • Ensure transparency in the use of extra-budgetary funds.
  • Expand the PIP into a full PEP that includes both recurrent and capital expenditures.

• Status of Recommendations:

  • The MEFF/PIP is an annual exercise, with PIP preparation beginning and a potential mechanism for linking SDPs and the macro framework.
  • The budget calendar is still in an experimental stage and not yet approved.
  • A new chart of accounts has been developed and is under revision.
  • The budget offset system has been improved, with 70% of loans and 30% of grants offset.
  • The financial reporting system for donor funds under SDPs is being operationalized.

2. Aid Management and Coordination

• Recommendations:

  • Improve donor coordination and simplify procedures for aid disbursement.
  • Ensure that aid is allocated only to priorities defined in the government's strategic planning documents (e.g., SDPs).
  • Encourage donors to move towards unearmarked channel 1 support.
  • Develop a comprehensive and reliable database of ongoing and expected aid projects, mapped onto SDPs and PIP.

• Status of Recommendations:

  • Significant progress has been made in simplifying donor procedures.
  • Donors are hesitant to provide substantial debt relief due to ongoing border conflicts.
  • IDA is the only donor that has started using channel 1, while ADB is finalizing the process.
  • A Steering Committee led by MEDAC has been established to improve aid coordination and transmission to regions.
  • Consolidated forecasts of aid disbursements have been prepared as part of PIP development.
  • A technical working group (TWG) has been formed to improve the allocation of IDA funds to SDPs and to discuss budget offset solutions.

3. Federal-Regional Fiscal Relations

• Recommendations:

  • Clarify the borrowing powers of regional and lower-level governments.
  • Clarify responsibilities for setting local taxes and mechanisms for harmonizing taxes across tiers of government.
  • Review and improve the inter-governmental grant regime to account for anomalies and international experience.

• Status of Recommendations:

  • Borrowing powers and local tax responsibilities remain unclear and not further addressed beyond constitutional provisions.
  • A revised budget grant formula has been approved, but not yet analyzed in light of the World Bank’s Regionalization Study and the budget offset system.
  • The budget offset system has been partially improved, but the issue of timely federal transfers remains unresolved.

4. Sector Expenditure Allocation

• Recommendations:

  • Increase the share of O&M (Operation and Maintenance) expenditures.
  • Increase budget shares for education and health as SDPs are implemented.
  • Review the implementation paths of SDPs based on expenditure implications, with a recommendation to extend the education and health SDPs and backload the roads SDP to fit within the fiscal envelope.

• Status of Recommendations:

  • There are some signs of improvement in O&M expenditures, but the trend is masked by increased defense spending.
  • Budget shares for education and health have increased in absolute terms but declined as a proportion of GDP.
  • The SDP implementation schedule is being adjusted to fit within the fiscal envelope, though no formal re-phasing has been completed yet.

5. Revenue Mobilization

• Recommendations:

  • Strengthen the Customs Authority by implementing ASYCUDA.
  • Improve tax administration and streamline the tax appeals process.
  • Introduce taxpayer identification numbers and expand cost recovery mechanisms in key sectors (agriculture, education, health).
  • Explore VAT implementation and improve tax collection efficiency.

• Status of Recommendations:

  • ASYCUDA has been introduced at the main customs station and is being made operational.
  • Taxpayer identification numbers have been introduced.
  • Penalties and interest charges for late tax payments have been authorized.
  • Tax fraud units have been expanded.
  • Agricultural income tax reforms and coverage expansion have been partially implemented.
  • Excise tax unification and VAT preparation have been initiated.

6. Future PERs and Strategic Focus

• Recommendations for Future PERs:

  • Conduct future PERs earlier in the fiscal year to support the planning phase rather than the budgeting phase.
  • Use PERs to reconcile government and donor estimates of aid flows.
  • Shift focus towards effectiveness and efficiency of government spending.
  • Encourage government involvement in the drafting of background notes for PER missions.

• Status of Recommendations:

  • The PER 2000 schedule has been advanced to align with the financial calendar.
  • PER 2001 will attempt further improvements.
  • The government has increased involvement in the PER process, though more can be done in drafting background notes.

Key Information and Insights

• Fiscal Year: Ethiopia uses a fiscal year from July 8 to July 7.
• Currency: The Ethiopian Birr (Br) is the national currency, with an official exchange rate of US$1.00 = Br 8.239 (as of August 12, 2000).
• Programs and Initiatives:
  • EMCP (Expenditure Management and Control Program) is a sub-program of the CSR (Civil Service Reform).
  • MTEF (Medium-Term Expenditure Framework) and PIP (Public Investment Program) are key instruments for fiscal planning.
  • PEP (Public Expenditure Program) is the proposed multi-year framework that includes both recurrent and capital expenditures.
  • SDPs (Sector Development Programs) are central to the country's development strategy, with the Education, Health, and Roads sectors being prioritized.
• Donors: Key donors include IDA, ADB, DFID, CIDA, and USAID. The HIPC Debt Initiative is seen as a potential avenue for debt relief, but progress is stalled due to border conflicts.
• Statistical Tables: Volume II includes numerous tables detailing fiscal trends, expenditure classifications, and revenue data from 1986/87 to 1999/00, providing a detailed overview of public spending and revenue patterns.

Conclusion

The Ethiopia Public Expenditure Review highlights the need for improved public expenditure management, donor coordination, and fiscal sustainability. While some progress has been made in implementing reforms and improving transparency, challenges remain in areas such as budget calendar adoption, federal-regional fiscal relations, and donor support. The review underscores the importance of aligning sectoral development with national fiscal planning and emphasizes the role of institutional capacity building and policy coherence in achieving sustainable development outcomes.