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News: HoF to draft policy requiring regional states to disclose all sources of funding

Hailu Ifa, Secretary of the Standing Committee on Subsidies Budget and Joint Revenue
Photo: HoF

By Firaol Bersisa @ FiraolBer

Addis Abeba: The House of Federation (HoF) announced that it is devising a new policy that obliges regional states to report to the house all their sources of revenues as well as clarify the distribution of the amount collected. 

House member, Hailu Ifa, secretary of the standing committee on subsidies budget and joint revenue said that the house found it necessary to devise the policy to put in place a framework of monitoring and support. “The federal government provides subsidies to regional states but there was never a directive to monitor and support the source of funding,” he said. 

Regional states mainly acquire their revenue from the federal government, covering over 60% of their annual budget. In the fiscal year of 2014 E.C, the federal government had a total budget of 561.6 billion ETB, of which, 203 billion ETB was allocated to regions as assistance budgets, based on a distribution scheme formulated by the House. In addition to these assistance budget packages, regions collect revenue, from different sources which are utilized to implement projects

Director of Fiscal Affairs and Study for Equitable Growth of the Regions, Waktole Dadi (Asst. Professor), told the Reporter that regions collect money from federal ministries, and other governmental and non-governmental organizations and said that this new policy would compel them to make their revenue known. 

He added that the basis for allocation of these budget packages to the regions is dependent upon the existing needs for infrastructure and population size, however, the lack of disclosure on their revenue, has meant the assistance packages also affected a disparity in the growth of the regions. 

Further explaining the consequences of such context, Waktole said, “The federal government, ministries, and different non-governmental organizations offer financial assistance to the regions, and sometimes zones and woredas, without assessing their needs. Consequently, there has been a waste of public finances and differences between the regions ’’ 

He added that the regions gather finances in the name of projects every year and some of these projects have been pending for years, which in turn caused a wastage of finances, resources that the federal government acquires from different partners, in the name of the national populace.

The HoF regulates the aforementioned support packages, however, due to it not being informed, it can not regulate the revenue regions garnered from other sources, he added.  

The policy being developed will allow the House to be cognizant,  through regular channels,  of the other sources of revenue for the regions and subsequently provide a retort to the questions of fairness being raised on the distribution of the federal financial packages, he explained. 

‘’ The House has never participated in regulating revenues to date, however, the new policy will change this by obliging disclosure and accordingly preventing inter-regional growth discrepancies,’’ he said.

The policy, designed in cooperation with the Ministry of Finance, will soon come into force, and as such the HoF has sent a letter requesting assistance to the World Bank for a study to be conducted on regional revenues. 

The House is expected to compose a new formulation for regional allocations of support budgets after two years and as such work is being done to erect a body that will review the population size, study regional financial capacities and regulate the support budgets, he stated. AS

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