Issues of vertical Imbalance in Ethiopia’s Emerging system of Fiscal Decentralization

Course ID
Ethiopian Economics Association (EEA)
Eshetu Chole

The major purpose of this paper is to examine the extent to which the problem of vertical imbalance arises in Ethiopia’s newly emerging system of fiscal decentralization and to critically assess existing arrangements for resolving it. It concludes that the degree of vertical imbalance n regional budgets is rather pronounced and that there are a number of limitations in the mechanisms used in resolving the problem. The revenue sources assigned to the regions are inadequate to help them discharge the weighty responsibilities assigned to them. Attention should be given to measures that will boost the capacity of the regions to enhance their efforts at resource mobilization since grants will be the major means of covering the revenue shortfall of regions, it is important to establish criteria and mechanisms for the provision of grants that are transparent and easy to administer. There should also be an attempt to depart from the practice of having only one type of grant (le, the matching type). It is further necessary to develop detailed criteria to govern borrowing by the regions from the central government. The existing legislative provisions are inadequate and full of ambiguities. Ultimately, however, the issue is a political one and centers on the relationship between the center and regional governments. The task is one of ensuring that this relationship is based on mutual understanding rather than distrust. In general, however, there is nothing to be gained by undue haste in implementing the new system of fiscal decentralization

Corporate Author:Ethiopian Economic Association/Ethiopian Economic Policy Research Institute (EEA/EEPRI)
Publisher:Ethiopian Economic Association (EEA)
Primary Descriptors:Decentralization

Secondary Descriptor:
Geographic Descriptors:Ethiopia
Cataloge Date:03/02/2013
Broad Subject heading:Fiscal policy
Call Number:330.05 ETH JOU
Serial Key Title:Ethiopian Journal of Economics
Publication catagory:Ethiopian Journal of Economics
Content type:EEA Publication
Year:October, 1994
Publication date:1994-03-02 00:00:00
Forum or Discussion date:2013-03-02 00:00:00
PDF file: Eshetu Chole_Issues of vertical Imbalance in Ethiopia Emerging system of Fiscal Decentralization.pdf
Place of publication:Addis Ababa, Ethiopia
Type of material:Serial (Journal)
Current frequency:Semiannual
Author: Eshetu Chole

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