Federal Democratic Republic of Ethiopia

(Federal Government)

Public Financial Management Reform Strategy

(2023-2028)

MINISTRY OF FINANCE

MARCH 2023
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Acknowledgement
This PFM reform strategy would not have been possible without the financial and
technical support of FCDO Ethiopia.
The Ministry of Finance would like to acknowledge the coordination and facilitation
role played by its own Expenditure Management and Reform Directorate, inputs
received from its other Directorates, and the assistance received from numerous
other public bodies, including the Ministry of Revenue, the Office of the Federal
Auditor General, the House of Peoples’ Representatives, the Federal Ministry of
Education, the Federal Ministry of Health, the Public Procurement & Property
Administration Agency and the Ethiopian Roads Administration.
The Ministry would also like to acknowledge with much appreciation the crucial role
played by development partners during the inception and validation workshops and
bilateral meetings.

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Contents
1. Introduction ............................................................................................................................ 10
2. Background and Context ...................................................................................................... 10
Policy and Legal Context ......................................................................................................... 10
Reform History .......................................................................................................................... 13
Previous Strategy...................................................................................................................... 14
3. Compiling the strategy .......................................................................................................... 15
Methodology .............................................................................................................................. 15
4. Characteristics of this Strategy ............................................................................................ 17
5. Governance of PFM reform .................................................................................................. 17
6. Analysis of Issues ................................................................................................................. 20
Pillar I – Budget Reliability ........................................................................................................... 20
Issues identified ........................................................................................................................ 20
Interventions to be included in strategy .................................................................................. 21
Pillar II: Transparency of Public Finances .................................................................................. 22
Issues identified ........................................................................................................................ 22
Interventions to be included in strategy .................................................................................. 23
Pillar III: Management of assets and liabilities ........................................................................... 24
Issues identified ........................................................................................................................ 24
Interventions to be included in strategy .................................................................................. 25
Pillar IV: Policy-based fiscal strategy and budgeting ................................................................. 27
Issues identified ........................................................................................................................ 27
Interventions to be included in strategy .................................................................................. 27
Pillar V: Predictability and control in budget execution.............................................................. 29
Issues identified ........................................................................................................................ 29
Interventions to be included in strategy .................................................................................. 31
Pillar VI: Accounting and Reporting ............................................................................................ 34
Issues identified ........................................................................................................................ 34
Interventions to be included in strategy .................................................................................. 34
Pillar VII: External scrutiny and audit .......................................................................................... 36
Issues identified ........................................................................................................................ 36
Interventions to be included in strategy .................................................................................. 37
Pillar VIII: Cross-cutting Issues.................................................................................................... 38
Introduction ................................................................................................................................ 38
Issues Identified ........................................................................................................................ 38

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Interventions to be included in the strategy ............................................................................ 41

7. Opportunities and constraints .............................................................................................. 46
8. Risk and mitigation strategies .............................................................................................. 47
Annex I: 2019 PEFA Assessment Summary .............................................................................. 49
Annex II: Strategic Plan................................................................................................................ 50
Pillar I: Budget reliability ........................................................................................................... 50
Pillar II: Transparency of Public Finances .............................................................................. 52
Pillar III: Management of Assets and Liabilities ...................................................................... 55
Pillar IV: Policy based Fiscal Strategy and Budgeting ........................................................... 62
Pillar V: Predictability and control in budget execution .......................................................... 65
Pillar VI: Accounting and Reporting ........................................................................................ 72
Pillar VII: External scrutiny and audit ...................................................................................... 75
Pillar VIII: Cross-cutting Issues ................................................................................................ 78
Annex III:Summary of TADAT Performance Assessment ........................................................ 83
Annex IV: Summary of MAPS Recommendation ...................................................................... 87
Annex V: Public Finance Management Monitoring, Evaluation and Learning Framework .... 93
Annex VI: Stakeholders consulted .............................................................................................. 94
Annex VII: Key documents consulted ......................................................................................... 96

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Abbreviation and Acronyms

AABE Accounting and Auditing Board of Ethiopia
BFPC Budget, Finance, and Planning Standing Committee
BI Budgetary Institutes
CBE Commercial Bank of Ethiopia
CC Climate Change
CRGE Climate Resilient Green Economy
CSO Civil Society Organization
DPs Donor Partners
e-GP Electronic Government Procurement
EBF Extra Budgetary Fund
EBU Extra Budgetary Unit
EIH Ethiopian Investment Holding
EMIS Education Management Information System
EMRD Expenditure Management and Reform Directorate
EPRDF Ethiopian Peoples’ Revolutionary Democratic Front
Foreign, Commonwealth and Development Office (of the UK
FCDO
Government)
FDRE Federal Democratic Republic of Ethiopia
FEACC Federal Ethics and Anticorruption Commission
FPPPA The Federal Public Procurement and Property Administration Agency
GDP Gross Domestic Product
GFS Government Finance Statistics
GHG Green House Gases
GIA Gender Impact Assessment
GoE Government of Ethiopia
GRB Gender Responsive Budgeting
GTP Growth and Transformation Plan
HGER Homegrown Economic Reform
HoPR House of People Representatives
IA Internal Audit
IAU Internal Audit Unit
IBEX Integrated Budget and Expenditure Management Software
IFMIS Integrated Financial Management Information System
IMF International Monetary Fund
IPSAS International Public Sector Accounting Standards
M&E Monitoring and Evaluation
MAPS Methodology for Assessing Procurement Systems
MoF Ministry of Finance
MoPD Ministry of Planning and Development
MoR Ministry of Revenue

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MTEF Medium Term Expenditure Framework

NBE National Bank of Ethiopia
NGO Non-Government Organizations
OFAG Office of the Federal Auditor General
ORAG Office of the Regional Auditor General
PAC Public Accounts Committee
PBB Programme Based Budgeting
PBs Public Bodies (often referred to as Ministries, Departments and Agencies)
PEFA Public Expenditure & Financial Accountability
PEHAA Public Enterprises Holding and Administration Agency
PFM Public Financial Management
PIM Public Investment Management
PMO Prime Minister’s Office
PPP Public Private Partnership
PR Public Relations
REACC Regional Ethics and Anticorruption Commission
SNG Sub National Government
SOE State Owned Enterprise
TADAT Tax Administration Diagnosis Assessment Tool
TOR Terms of Reference
TSA Treasury Single Account
UK United Kingdom of Great Britain and Northern Ireland
UN United Nations
ZBA Zero Balance Account

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Executive Summary
This document sets out the Federal Government of Ethiopia’s strategic plan to tackle
challenges presented by public financial management (PFM) systems at the Federal level.
The objective of the strategy is to improve PFM to facilitate Ethiopia’s progress on the
pathway to prosperity. It is fully aligned with the national Ten-year Development Plan.
The strategy synthesises recent PFM diagnostics and discussions with stakeholders to
identify issues faced by PFM systems and procedures and then suggests a plan to tackle
these. Stakeholders included public bodies, parliament, and donor partners. Activities that
make up this strategic plan are sequenced over a five-year period (EFY 2016-2020),
although it is recognised that not all challenges identified will be met within this period.
Findings are set out against the seven PEFA (Public Expenditure and Accountability)
framework pillars plus one additional cross-cutting pillar. Activities to address the findings
have then been formulated and set out in a matrix to form a sequenced and prioritised five-
year plan. To ensure accountability, the strategy also sets out the governance arrangements
underpinning strategy implementation and a monitoring and evaluation framework (with
output indicators, milestones, and outcome indicators). A Steering Committee chaired by the
Minister of Finance will oversee implementation.
The strategy has eight pillars, as follows:

• Pillar I addresses budget reliability. The outcomes sought are for expenditure and
revenue outturns to show minimal variances, in accordance with good international
practice.
• Pillar II addresses transparency of public finances. The outcomes sought are that
budget documentation presented to the legislature is inclusive of all information and
that the public has access to key information, that public servants are aware of the
need to produce and disseminate information to key stakeholder groups, civil society
organisations, and media are also aware of principles of financial accountability and
contribute to the demand for information, and that financial data is comprehensive,
both in terms of government published data concerning extra-budgetary units and in
terms of service delivery.
• Pillar III concerns the management of assets and liabilities. The outcomes sought
are that all public corporations publish annual financial statements within six months
of year-end, that sub-national governments produce annual and timely statements,
that quantified and consolidated contingent liabilities and fiscal risks of Government
published annually, that there is properly regulated public investment management,
and that all public assets are properly recorded, managed, and monitored.
• Pillar IV concerns policy-based fiscal strategy and budgeting. Outcomes sought
are the fiscal strategy and budget prepared with due regard to government fiscal
policies, a budget with a medium-term focus, for budget circulars to be released after
legislative approval of budget ceilings, that sector strategies are available for all
sectors and published by Ministry of Planning and Development, for legislative
scrutiny of the budget is given two months and that there is a tax policy in place which
promotes the policy priorities of Ethiopia’s Climate Resilient Green Economy.
• Pillar V concerns predictability and control in budget execution. Outcomes
sought are a revenue management regime which takes account of risk, provides
reliable revenue estimates, monitors arrears, and produces reliable information,
predictability of in-year resource allocation, Payroll integrity, procurement practice
which reflects the recommendations of the Methodology for Assessing Procurement

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Systems (MAPS) and which has enhanced transparency and reflects climate smart
principles, internal controls which are effective, and an internal audit function which
reflects international standards and a risk-based methodology, and which covers all
PBs and whose reports are acted upon by management.
• Pillar VI concerns accounting and reporting. Outcomes sought are that advances
are cleared promptly, that there is timely in-year Integrated Financial Management
Information System (IFMIS)-generated reporting, that annual accounts include
information on tangible assets and guarantees, and that methodology is consistent
with International Public Sector Accounting Standards (IPSAS) is fully rolled out.
• Pillar VII relates to external scrutiny and audit. Outcomes sought are an
autonomous SAI (the Office of the Federal Auditor General (OFAG)) whose reports
are responded to, and a Public Accounts Committee which follows up the work of
OFAG and holds that office accountable, and a media sector and civil society
organisations who play a role in enhancing government accountability.
• Pillar VIII concerns cross-cutting issues. Outcomes sought relate to gender
budgeting, professionalisation of the PFM sector, climate responsive PFM, building
financial management literacy across government and enhancing fiscal federalism.
The strategy also includes a risk assessment and suggests mitigation. This will be monitored
by the Steering Committee.

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1. Introduction
This document sets out the Federal Government of Ethiopia’s strategic plan to tackle
challenges presented by public financial management (PFM) systems at the Federal level.
The strategy aims to improve PFM to facilitate Ethiopia’s progress on the pathway to
prosperity. It is fully aligned with the Ten-year Development Plan.
The strategy synthesises recent PFM diagnostics and discussions with stakeholders to
identify issues faced by PFM systems and procedures and then suggests a plan to tackle
these. Activities that make up this strategic plan are sequenced over a five-year period,
although it is recognised that not all challenges identified will be met within this period. The
five-year period will commence at the beginning of EFY 2016 (8 th July 2023) and finishes at
the end of EFY 2020 (7th July 2028).

2. Background and Context

Policy and Legal Context
The Constitution of the Federal Democratic Republic of Ethiopia, which came into
effect in 1995, provides the legal and institutional framework for public financial
management. It sets out the separation of duties of the Executive (set out in detail in
Chapter 8, Articles 72-77), Judiciary (Chapter 9, Articles 78-84, and Legislature (Parliament).
Chapter 11 (Miscellaneous provisions) sets out some key responsibilities and functions,
including public expenditure (Article 94), revenue (Article 95), and powers of federal taxation
(Article 96). Article 101 establishes the powers of the Auditor General.
Since the Constitution’s promulgation, Parliament has enacted several proclamations in line
with the Constitution to establish and elaborate rules and regulations, and their supporting
institutional arrangements for public financial management.
Over the last 20 years, Ethiopia has made impressive progress in fighting poverty and
tackling economic development. In November 2010 Government issued the first Growth
and Transformation Plan (GTP I) covering the years 2010/11 to 2014/15 and followed this
with GTP II in May 2016, which covered 2015/16 to 2019/20. During this time, Ethiopia
achieved ‘…rapid and high economic growth. Gross Domestic Product (GDP) grew on
average by 9.2% per year, and the volume of real GDP rose from Birr 828 billion in the
2009/10 fiscal year to Birr 1.99 trillion in the 2019/20 fiscal year’1. Prudent fiscal policy
underpinned by well-chosen strategic priorities (including agricultural development) was seen
as instrumental in bringing about this growth even though there remained significant
challenges, not least inflation, poor domestic revenue performance and disappointing
exports. Public-sector large-scale infrastructure developments were at the centre of rapid
growth, funded by debt and development receipts.
The current national development plan, the ‘Ten Years Development Plan – a pathway
to prosperity’ (2021-2030), recognises several challenges inherent in the economy. There
are some specific macroeconomic imbalances, particularly inflation and large-scale
government indebtedness. Although economic growth has been impressive, unemployment
continues to rise (particularly in urban areas), in addition to issues created by the country’s
need to trade internationally. Imports are consistently greater than the value of goods
exported, meaning that managing and maintaining a stock of foreign currency to fund this is
a constant challenge. Further, a balance of payments issue results in constant challenges

1
‘Ten Years Development Plan – A pathway to prosperity’ 2021-2030, FDRE, p2

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around foreign currency. Meanwhile, the economy remains vulnerable to exogenous

shocks, or shocks which are often external or unforeseen (exemplified by the downturn
experienced as a result of Covid-19 and internal security issues, but also by continuing
climate-related shocks). It is felt that an aspect of previous approaches – high public
sector-led infrastructure development – has actually made inherent inequalities worse, not
least because of the impact of ‘state capture’ of infrastructural development processes which
have in the past served the interests of an elite and those with privileged market access. In
addition, basic service provision (particularly in health and education) lags behind public
expectations in terms of both quality and access, and limited government capacity,
widespread malpractice, and the failure of public sector institutions to deliver and manage
both resources and projects are seen as instrumental in constraining future growth.
The new strategy takes a different tack from the GTPs, seeking greater partnership (e.g.,
with the private sector) and focusing on the quality of growth. This tack is markedly different
from approaches used by previous Ethiopian Peoples’ Revolutionary Democratic Front
(EPRDF) governments, which sought to create a big inclusive state that dominated and
controlled the economy, and often rejected the idea of partnerships with both the public
sector and civil society, which were perceived as ‘outside’ actors.
The current ten-year plan identifies ten strategic pillars, namely:
1. Quality Economic Growth and Shared Prosperity
2. Economic Productivity and Competitiveness
3. Technological Capability and Digital Economy
4. Sustainable Development Financing
5. Private Sector-led Economic Growth
6. Resilient Green Economy
7. Institutional Transformation
8. Gender Equality
9. Access to Justice and Efficient Civil Services
10. Regional Peace Building and Economic Integration
At the heart of the ten-year plan is ‘homegrown economic reform’ (HGER)2, with a focus
on sustaining rapid growth whilst maintaining macroeconomic stability, including the
reduction of debt and the creation of employment. HGER is to be achieved through
macroeconomic, sectoral, and structural reforms. A crucial part of the macroeconomic
reforms is fiscal policy reform. As such, modernisation and enhancement of tax collection
capacity are fundamental to the plan’s ambition of achieving ‘proper public expenditure
management’ and reforms in debt management. Indeed, there is a focus on ‘making the
overall tax administration fair, transparent and accountable’3. For example, the plan notes
that ‘…the fiscal policy direction of the country in the coming ten years is to maintain healthy
balance between government revenue and expenditure’. And ‘by reforming the tax policy and
regulations, modernizing the tax system and administration, reforming the tax structure and

2
The Growth and Transformation Plan I and II (the predecessors of the current HGER) were primarily led by high
public investments in infrastructure and human capital development which fuelled the country’s growth. Though
the investments narrowed the gaps in transport and energy infrastructure and laid the foundation for sustained
growth, both plans were only partially successful in achieving structural transformation and stimulating exports.
They also failed to encourage private sector development to create decent jobs. Moreover, the efforts to finance
ambitious public investment programs through directing domestic financial resources and domestic borrowing,
coupled with poor project execution, resulted in severe macroeconomic imbalances (including foreign exchange
shortages, increased risk of external debt distress, growing financial sector vulnerabilities, limited access to
finance for the private sector, high inflation, and potential misallocation of resources).
3
‘Ten Years Development Plan – A pathway to prosperity’ 2021-2030, FDRE, p9

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fighting illegal trade activities; it is projected to raise gross domestic revenue from birr 395
billion to birr 3.9 trillion’4. The National Development Plan notes a decrease in tax to GDP. It
seeks to reverse this through policy (to a collection of 18.2% tax to GDP), legislative and
regulatory reform, digitisation, improving accountability and transparency, and fostering a
culture of greater compliance.
Similarly, the plan notes that ‘[the] budget administration and auditing system has been
given due attention. Strict auditing and monitoring system is necessary in order to
ensure that the allocated budget is utilized for the intended social and economic
purposes by ensuring that development projects designing follows thorough appraisal
and feasibility studies’5.

Furthermore, on budgeting and expenditure management, the plan notes that ‘…the
government budget allocation will prioritize poverty reduction, human
resources development, infrastructure development, and the development of
productive sectors so as to raise overall production and productivity…
Additionally, major reforms will be undertaken to strengthen and enhance the
effectiveness of government expenditure’6. A particular area of concern is weak
public investment management, which negatively impacts on foreign currency reserves,
public loan repayment capacity, and capital productivity. Delays in implementation and poor
feasibility assessment result in cost overruns. The reform of public enterprises, enhancing
revenue generation, strengthening public-private partnerships (PPP), and strengthening
public finance administration are all identified as initiatives that will contribute to improving
infrastructural development 7. Major economic reforms include the introduction of a capital
market and the strengthening of digital finance. These are significant policy departures.

Meanwhile, as part of the discussion on structural reforms, the plan notes as a priority
‘…promoting the development of civic societies: domestic reform processes are designed to
create a conducive environment for civic societies to play a significant role in economic,
social, and political activities’. The plan notes the clear role of civil society as part of a
broader, longer-term democratisation process. This has implications for (more) extensive
participation in fiscal accountability and transparency activities and, along with the
participation of the private sector, represents a significant policy departure from the
previous GTPs.
This, therefore, speaks to the importance of tax and revenue management, budgeting,
auditing, project appraisal and broader accountability to the strategic policy direction of
Federal Democratic Republic of Ethiopia (FDRE) and points to how any PFM Reform
Strategy can and should be linked to the broader policy framework in place in Ethiopia.
Finally, PFM, more generally, is an enabler of the economic sector development plan at the
heart of the Ten-year Plan.
Consequently, this PFM strategy should be seen as both setting out the reforms needed to
help institutions maintain their constitutional obligations (as set out in the supreme legal
instrument) and directly aligned to and enables the implementation of the Ten-Year Plan (the
supreme policy document) and the legislative framework.

4
‘Ten Years Development Plan – A pathway to prosperity’ 2021-2030, FDRE, p32
5
‘Ten Years Development Plan – A pathway to prosperity’ 2021-2030, FDRE, p9
6
‘Ten Years Development Plan – A pathway to prosperity’ 2021-2030, FDRE, p32
7
10-year development plan (EFY 2013 – 2022), Amharic version - p91 (published by the Planning and
Development Commission)

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Reform History
Over the last twenty years, Ethiopia has had a good track record of PFM reform. PEFA
assessments from 2006 have shown the country performing well against other countries in
the sub-Sahara Africa region (see Figure 1), brought about by a solid commitment to
nationally-led reform. Since the 1990s, reforms have successfully been undertaken at the
Federal, Regional and woreda levels, with sub-federal systems being robust enough to
accommodate donor modalities akin to budget support in the mid-2000s. These years saw
the roll-out of the IBEX platform, comprising budget formulation and expenditure systems
working on a double-entry basis. In addition, there were strong reform programmes which
yielded impressive results around financial reporting, budgeting, and external audit coverage
across jurisdictions.
Over the past four years, reforms have been guided by the PFM Reform Strategy for
2018–2022. Commitment to reform is strong across both the Federal Government and
the Regions, and whilst donors have given significant support, there is considerable
domestically led drive and ownership. The PEFA assessment8 has highlighted ‘… notable
achievements in
improving the legal Figure 1: Average PEFA Scoring (2016 PEFA Framework)
framework9, revenue
performance10, budget
preparation11 and
management, cash
management, debt
management12,
accounting and
reporting13, procurement
and asset management,
internal audit, external
audit, financial
information systems,
and transparency and
accountability in PFM’.
However, the PEFA assessment also noted that there had been performance deterioration in
certain PEFA indicators related to budget credibility, predictability, and control in budget

8
PEFA 2019, Federal Government of Ethiopia, page 100.
9
Legal and regulatory reforms for overall Public Financial Management Administration, Income Tax, Office of the
Auditor General, Public Investment Management, Public Procurement, Property Administration, and Public
Private Partnership Administration have all been undertaken in recent years, as well as the publication of a
Gender Responsive Budgeting guideline.
10
Revenue performance has been supported by reforms in the automation of revenue administration. The Tax
Administration Support System (TASS) has been operational since 2020, enabling taxpayers to access online
services. The process of replacing SIGTAS is ongoing. Capacity development activities are ongoing in the area
of fiscal and tax policy with the support of development partners.
11
This has included the roll-out of programme-based budgeting.
12
Recent reforms in public debt management have seen the Debt Management and Financial Analysis System
(DMFAS) upgraded. Medium-term debt management strategies, regular debt sustainability analysis reports, and
debt-related periodic reports were all produced and made public.
13
This has included the development of Citizens' Budget Preparation Guidelines and, so far, the publication of
one Citizens’ Budget Report

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execution. This is now of considerable concern to FDRE. Figure 1 shows Ethiopia’s

comparative standing against other countries in the region in terms of PEFA performance.14
FDRE has recently undertaken significant reforms in fiscal risk reporting, public investment
management, and the oversight of State-Owned Enterprises (SOEs). However, these are all
areas where challenges remain. An emerging agenda has been the professionalisation of the
PFM sector. The Accounting Auditing Board of Ethiopia (AABE) has been established, and is
working towards establishing a professional accounting organization, and has been
instrumental in helping the roll-out of International Financial Reporting Standards at major
public interest entities such as SOEs and in regulating Ethiopia's accounting and auditing
practices.
PFM reforms were financed by government and development partners. Recent donor-funded
reforms have been dominated by the World Bank’s Ethiopia Public Financial Management
Project. A key part of this has been the roll-out of a new IFMIS system, which has then itself
necessitated and driven a number of reforms. Roll-out has been a little slow and hampered
partly by the insufficient capacity to provide technical support and poor internet connectivity.
Despite this, the roll-out is now pretty much complete. More than 200 public bodies (PBs) are
now entirely using IFMIS, and few federal PBs are awaiting the transition from IBEX to
IFMIS. The roll-out of IFMIS has contributed to better cash management, with a reduction of
the ‘cash float’. It also stands to improve the timeliness and quality of financial reports. The
underlying Chart of Accounts is GFS compliant.
IBEX has also been enhanced at the SN level, with the roll-out of payroll modules at the
woreda level.
The programme has also supported strengthening accountability institutions (including
Offices of Regional Auditors General and the Office of the Federal Auditor General) and anti-
corruption commissions, and procurement, in particular e-Government Procurement (e-GP).
e-GP has been piloted in nine procuring entities, and more than 60 entities are using the
platform.
Support has also been given by the IMF. AFRITAC-East has supported the development of
tools to guide Public Investment Management (PIM), and certain aspects of treasury
management, including the extension of the TSA.

Previous Strategy
This strategy document replaces and updates the ‘Government Financial Management
Strategic Plan’, published by Government in March 2018.
The previous strategy was implemented during the period 2018-2022 and
encompassed fiscal policy, tax policy, programme budgeting, cash management and
payments, debt management, public accounting and reporting, internal audit,
procurement and asset management, financial information and monitoring systems,
and support to partnerships between government and the private sector.
The previous strategy sets out tasks and outcomes against nine goals, namely:

• Goal 1: Balance government revenues and expenditures over the medium-term

• Goal 2: Making cost-effective budget allocations

14
Based on data available from PEFA. The assessments were conducted between 2017 and 2022. The rating is
computed by converting A, B, C, D into 4,3,2,1 respectively. This analysis doesn’t take into account the specific
country contexts and ongoing PFM reforms.

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• Goal 3: Make government debt management and payment systems modern, efficient,
and cost-effective
• Goal 4: Timely and accurate government accounting and reporting
• Goal 5: Strengthen value for money by improving the internal audit and control
system
• Goal 6: Modern government procurement and public asset management system
• Goal 7: Modern IT systems that support government financial administration
• Goal 8: Government financial administration that is participatory, transparent, and
accountable
• Goal 9: Greater capacity in government financial administration
The 2018-2022 strategy had many strengths, including the provision of a clear statement of
the FDRE priorities at the time of writing (although there was ranking of priorities – see
below). It also set clear structures and recommendations about the governance and
monitoring of PFM reform, much of which will be taken by this strategy.
However, many stakeholders, including the PEFA assessors, government officials and
development partners, have pointed to a number of deficiencies, including:

• The strategy is limited in scope. The document has been very much one of the
Ministry of Finance but does not include other important agencies involved in the
PFM cycle, including the Ministry of Revenue, the Office of the Federal Auditor
General, Parliament and the Federal Ethics and Anti-Corruption Commission. It also
fails to address issues around broader accountability, for example, the involvement of
civil society;
• It sets out tasks, but these are not sequenced or timebound, making the
monitoring of the implementation of the strategy very difficult;
• Tasks are not prioritised – most to least important; and
• There is no clear and succinct M&E framework.
These shortcomings were discussed and validated by internal stakeholders invited from
various government entities in a Ministry of Finance run workshop.

3. Compiling the strategy

Methodology
This strategy has been developed to replace the ‘Government Financial Management
Strategic Plan, 2018-2022’. The primary reason for developing a new strategy is that the
existing strategy is about to expire, but there are also in place more up-to-date diagnostics
which help to inform a coherent view of strengths and weaknesses across the PFM cycle.
The primary diagnostic is the Public Expenditure and Financial Accountability (PEFA)
Assessment – the Federal Democratic Republic of Ethiopia Performance Assessment
Report, published in November 2019 (referred to as the PEFA). The PEFA assessment is a
comprehensive diagnostic which can help guide the design of PFM reform programmes, but
importantly PEFA assessments do not make recommendations. The use of the latest PEFA
assessment to develop this strategy has been guided by the PEFA Secretariat’s guidance
document Using PEFA to Support Public Financial Management Improvement – PEFA
Handbook Volume 4 (often just called PEFA Volume 4). This recommends an approach
where weaknesses are identified. Then the underlying causes of weaknesses are identified,
along with the desired outcomes of reform in specific PFM areas. The actions required are
then identified to address these and then sequenced and prioritised, with due consideration

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given to the constraints faced. These elements were used to create this PFM reform
strategy.
Further, other elements beyond the PEFA assessment have been considered in developing
the strategy. This includes any diagnostic studies/tools and progress made post the
completion of the PEFA in 2019 and (prior to the formulation of this strategy in 2022). The
approach for this strategy formulation has therefore been:

• To take the PEFA as the primary source document. The resulting strategy has
followed the PEFA structure of seven pillars, with the addition of an eighth pillar to
capture some cross-cutting issues. The overall assessment against the performance
framework is set out in Annex 1. The review has revealed serious challenges in
budget reliability, public access to information, certain aspects of asset and liability
management, fiscal strategy, fiscal risk management, PIM, medium-term perspectives
in budgeting, procurement, and internal audit. Overall, the PEFA has painted a
disappointing picture, noting that ‘…on the basis of the 2011 method, between the
2015 and the 2018 assessments, there have been more deteriorations in
performance (7) than improvements (3) … Fifteen indicators have remained unvaried
and six are not comparable’.
• To augment the PEFA with some additional diagnostics, including:
o A MAPS assessment (2021);
o PEFA Climate (2021)
o A TADAT assessment (2016);
o Open Budget Survey (2021): International Budget Partnership;
o CABRI PFM Capability Assessment Report (2021); and
o UN Women Gender Gap Analysis (2018);
• Various government, project and donor reports have also been consulted, including
Expenditure Management and Control Directorate (EMCD) annual performance
reports, the World Bank’s PBB Report Rapid Assessments, Fiduciary Risk
Assessments of FCDO, IFMIS Effectiveness Reports, PIM Guidelines, and reports
from the Ethiopia Tax Systems Transformation Programme.
• To further supplement the analysis, interviews of stakeholders were also undertaken
(see Annex 4 for a list of people met). This has allowed the strategy to take account
of progress that has been made since the PEFA was concluded in 2019 (some 2-3
years before the underlying analysis); and
• To present a consolidated discussion document, synthesising findings from the above
three activities. The document ‘Discussion Document: Identifying issues for Ethiopia’s
PFM Reform Strategy’ was presented at a cross-government workshop in September
2022. The document itself presented reform priorities. This tool considers matters
raised by the PEFA which could be remedied reasonably easily (‘quick wins’) as well
as considering the impact of any given intervention on the overall effectiveness of
PFM systems. Much of the sequencing suggested was determined by logic and
common sense. The consultation meeting allowed stakeholders to discuss and agree
on prioritisation and sequencing and provide useful updates and current perspectives
on key issues. A number of refinements resulted, including an enhanced focus on
professionalisation and capacity building needed for compliance and some fresh
perspectives on internal and external audits. All these elements have been
considered in the ‘Issues Identified’ section below, which sets out issues and actions
to be taken, pillar by pillar.

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4. Characteristics of this Strategy

The strategy has the following characteristics:

• It is aligned and consistent with and enables the strategic policy framework for
Ethiopia. In particular, it is aligned with the ‘Ten Years Development Plan – A
pathway to prosperity’ and is essential in enabling more efficient and effective service
delivery, home-grown economic reform and growth, which all lie at the centre of this
national development plan;
• It covers all aspects of the PFM cycle. It is not centred purely on the Ministry of
Finance but takes account of other institutions (e.g., OFAG and the Ministry of
Revenue) and issues (accountability and civil society engagement);
• Its focus is on the federal government, but it recognises the role that the federal
government plays in the improvement of the quality of fiscal federalism, in
particular, the role that the federal entities can play to inspire, lead, promote and
mentor reform at the regional level and across the subnational governments15;
• It is time-bound and sequenced, allocating activities across the five years of the
strategy;
• It nevertheless recognises that there are reforms that cannot be accommodated
within the five-year strategy. These are recognised in the underlying analysis but,
due to their nature or prioritisation, are not always included in the strategic plan
itself16;
• In its allocation, it prioritises activities. Prioritisation has taken into account the
overall policy framework of the federal government as well as consideration of ‘quick
wins’, where PEFA performance can be turned around with relatively little effort, and
stakeholder consultation, which has ensured an appreciation of context and has
informed the feasibility of proposals; and
• It has a monitoring and evaluation framework with output indicators, milestones,
and outcome indicators.

5. Governance of PFM reform

The implementation of previous the previous PFM reform strategy has had specific
governance arrangements. Activities have been overseen by a National PFM Reform
Steering Committee chaired by our Minister of Finance. The committee has representation
from the Minister of Revenue, the Minister of Planning, the Governor of the National Bank of
Ethiopia, and the Auditor General. The administrative focal point of the reform has been the
Expenditure Management and Control Reform Directorate under the MoF.
Under this committee sits the Technical PFM Reform Steering Committee. It reports to the
National PFM Steering Committee and comprises selected directorates from the MoF and
technical representatives from five key public bodies (AABE, OFAG, FPPPA, NBE, and the
Regional Bureaux). The Technical Steering Committee is chaired by the Director of EMCD.
These arrangements have been broadly successful and will thus continue, although terms of
reference of the committees will be revisited to reflect the following:

15
Fiscal federalism is treated as a cross-cutting issue in this document. The subsequent interventions identified
are not actions for individual SN governments but rather for the Federal Government to take in its role of lead and
coordinator.
16
For example, IPSAS reforms will, in all probability, take longer than five years to roll out; professionalisation
initiatives will be ongoing and not complete within the five years, and some of the reforms supported by the
federal government to be rolled out in regions (e.g., IFMIS) also have a long-time horizon.

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• A clear set of procedures about how M&E information resulting from this strategy’s
M&E framework will be used and how this information will (re)enforce
accountabilities. These will be developed by the Technical Committee from the
outset17;
• Clear statements and assignment of responsibility for the oversight of risks to deliver
the strategy and mitigation actions for those risks. Section 8 of this document sets
out risk and mitigation. This needs to be seen as a ‘living document’, with risks
adequately tracked and monitored, new risks added as they emerge, and mitigation
strategies adapted and monitored. A review and update of the Risk Analysis will thus
be an item of standing business for each Technical Committee meeting, with revised
analysis being produced as a result of collective monitoring and discussion; and
• Broader membership of both of these committees, given the nature of this strategy,
to include the Ministry of Revenue, the Ministry of Planning and Development, the
Office of the Federal Auditor General, the Federal Ethics and Anti-corruption
Commission and other bodies working in accountability. We will explore the option of
forming two sub-committees, one involving the regions and one the broader
representation of the various federal stakeholder bodies. (Institutional set-up and the
proposed institutional structures for the implementation, monitoring and evaluation of
the Strategy are laid out in section 3 of the MEL framework)
• The role of the Technical Committee in supporting regions in developing their
respective PFM strategies. EMCD will be responsible for facilitating and coordinating
reforms implemented by the Federal government at regional levels, such as the
IFMIS roll-out.

Each public body will assign a focal point to facilitate reform implementation, reporting and
M&E.
An essential task for the Technical Committee will be the production of annualised plans
supporting the overall strategy. This will unpack the activities identified in the strategy and
break them down into smaller incremental actions and steps with timelines for completion. In
addition, an annual plan template has been developed and will be completed by the
responsible agency and focal point. These individual plans will then be compiled into a
yearly master plan, which the Committee will monitor.
A tentative structure is depicted below.

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The Directorates of MOF which will be members of the Technical Committee are depicted
below. This might be revised and revisited on the advice of the National Steering Committee.

MoF Key Reform

implementing Departments

Government Budget
Fiscal Policy IFMIS Treasury
Accounts Directorate

Debt
Inspection Legal Dept Tax Policy
Directorate

MoF Reform Implementing Directorate

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6. Analysis of Issues

Pillar I – Budget Reliability

Issues identified
Excessive ‘expenditure composition outturn’ variances. This is a measure to show the
extent of reallocations between the main budget categories during execution and, therefore,
by implication, the reliability of the budget. There are two different dimensions to this,
namely:

• Variations by function for the three years surveyed by the PEFA averaged more
than 15% 17, and for EFY 2013 stood at 23%. This was mainly due to non-utilization
of allocated budget and unbudgeted customs payments. But the PEFA also notes the
need to reallocate budgets due to drought and ‘political instability’. In recent years,
the impact of COVID-19 and internal instabilities have contributed to the need for
budget transfers between Budget Institutions (BIs). These challenges have also
contributed to underspending of capital budgets.
• Variation by economic type was also high (12.2% in 2015/2016, 18.6% in
2016/2017, and 7.2% in 2017/2018).
There is also excessive variation in revenue outturn against budget. In terms of
aggregate revenue outturn, the actual total revenue outturn for at least two of the last three
years of the PEFA, review fell in the range of 92% to 116%18. For the years following the
PEFA it fell within the range of 104% and 117%. Meanwhile, composition variance was also
high – for all three years of the PEFA survey, it was more than 15%19, and ranged from 15%
to 19% between 2019 and 2021. The tax revenue was short of the budget in all three years,
with donor assistance being higher than that budgeted, thus helping to account for higher
aggregate revenue outturns.
One of the challenges faced in this area is high staff turnover amongst budget experts across
PBs. Further, it is clear that budget performance is not as keenly monitored and evaluated as
it might be, with deficiencies in the in-year reporting regime. Capital expenditure is a
particular challenge, with some delays in expenditure against budget allocation attributable to
elongated procurement processes.
Unpredictability in assistance and loan payments also contribute adversely to revenue
outturn variance.
However, perhaps the biggest challenge in expenditure budgeting relates to discipline
around budgetary processes. The MoF also feels that low priority is given to the budget
process across government. The PEFA review goes further, feeling that procedurally the
ease at which budget adjustments are made contributes to a culture of lax budgeting, stating
that ‘…the budget administration directive provides guidance about the procedures to use
when making budget transfers. However, the lack of restriction or limit on transfers to be
made within a year could make BIs reluctant to properly plan, knowing that they can make
budgeted adjustments during execution’.

17
25.9% in 2015/2016, 25.1% in 2016/2017, and 23.3% in 2017/2018
18
102.9% in 2015/2016, 93.7% in 2016/2017, and 93.8 in 2017/2018
19
21.1% in 2015/2016, 23.2% in 2016/2017, and 21.4% in 2017/2018

20
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Similarly, the PEFA notes, in respect of revenue, that whilst ‘‘…the major reasons for low
collection of domestic revenue were weak economic performance and shortage of foreign
currency leading to low foreign trade’.... ‘Other major factors that led to low tax collections
include weak tax enforcement, [and] insufficient skills in tax administration…”.

Interventions to be included in strategy

Consideration should be given to strengthening the management and regulation of
budgetary compliance so that fiscal discipline is improved. Therefore, consideration
should be given to reviewing the regulatory framework, perhaps by comparing it with good
practice from other jurisdictions and by considering how the existing regulatory framework
can be better enforced. (Strategy Plan P.I.1.1.1)
Capacity building needs to take place for planning and budgeting officers across PBs,
with particular emphasis on the complexities of capital budgeting. Consideration should be
given to the enhancement of the oversight role of the PIM Directorate. (Strategy Plan
P.I.1.1.2 & P.I.1.1.4)
PFM literacy amongst senior management and heads of PBs also needs to be
enhanced. This will help to ensure that the annual budget process has adequate traction.
(See Strategy Plan P.I.1.1.5)
A critical review of the readiness of capital projects should be included in the budget
process to help to ensure that only capital projects that can be implementable in the
fiscal year are included (taking into consideration all factors: procurement, land availability,
and many other impending factors known to delay project implementations) (Strategy Plan
P.I.1.1.3)
Issues relating to poor revenue and tax enforcement need to be addressed. Revenue
budgeting across PBs also needs capacity support. (Strategy Plan P.I.2.1). There is also
a link here with revenue forecasting covered in Pillar V. Enhancements to capacity in this
area for MoF and MoR.

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Pillar II: Transparency of Public Finances

Issues identified
There are challenges relating to access to information and the availability of documentation
for two key stakeholder groups, namely the legislature and the public, as follows:

• In respect of the legislature, the 2019 PEFA identified that budget

documentation presented by the Executive to the Council of Representatives is
insufficient compared to the documentation required by good international practice. In
particular, the previous year’s outturn is not included in the pack of documents sent
for consideration of elected representatives, and there is no information provided on
debt stock, financial assets, and summaries of fiscal risk. An issue that underpins this
is an apparent lack of awareness amongst MoF staff around international good
practice regarding what information should be included in budget
documentation and what should ideally be provided. No guidelines exist on this
issue; furthermore, there is no ‘demand pull’ from elected representatives who seem
aware of the value of this information.
• In respect of the public, access to fiscal information is limited. The PEFA
assessment found that three basic elements (Executive budget proposal
documentation, in-year execution reports, annual budget reports) are not available,
and three additional elements (pre-budget statement, summary of budget proposal [a
citizens’ budget] and macro-economic forecasts) are also absent. Work has recently
been undertaken to improve the website of MoF and thus improve public access to
fiscal information. This is a useful platform for improving performance in this area.
However, the 2021 Open Budget Survey confirmed that some documents are still
unavailable in the budget document, including executive budget proposals, in-year
budget reports, and year-end reports. The production of a Citizens’ Budget has been
undertaken in the past but does not seem to have been institutionalised.
The challenge in both areas is not that information does not exist. The Budget
Directorate has agreed that it is possible to prepare most reports required by good
practice (although in-year reporting remains a challenge – see discussion in Pillar VI).
Support is clearly needed in this area, but levels of commitment and degrees of collaboration
from PBs across the government present an ongoing challenge. This suggests that levels of
awareness and professionalism need to be addressed, not just by senior management of
MoF but also by the top of government. Another aspect to be considered in this space is the
demand for information instead of its supply. Demand for fiscal information from a broad
spectrum of stakeholders (politicians, citizen groups, civil society organisations and the
media) appears low, reflecting a lack of understanding of public financial management and
its importance to policy implementation. For example, if elected representatives understood
the value of scrutinising prior year outturns, a demand for this information would be created,
which would leverage fiscal transparency.
The PEFA also ruled that the inclusion of expenditure and revenue in financial reports
is, in effect, incomplete. The diagnostic report identified revenue and expenditure for
EBUs20 not included in the published statements of the government. Further examination has
shown that there is no regulatory framework to ensure these elements are included in
the government’s consolidated financial statements. However, the roll-out of the IFMIS –

20
These Extra budgetary units are (a) the Road Fund, (b) the Industrial Development Fund, (c) the Oil
Stabilization Fund, and (d) the Pension and Security Fund

22
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ultimately to all PBs – presents an opportunity to enhance the inclusivity of the financial
framework and resulting financial statements.
A report on service delivery was not routinely published. This report should include
information on outputs and outcomes from all sectors, again disaggregated by programme.
Key data exists at the sector level and, in some sectors, is properly consolidated (most
notably in health and education), but this is not then consolidated further at the federal level
for all sectors and made available. There is a lack of clarity regarding who is responsible for
providing data, to whom, and how data should be published. Some formalisation of
responsibilities and accountabilities is required.
An overarching issue relating to the transparency of finances, particularly the extent to which
data are available, relates to IT platforms. The IFMIS roll-out is now pretty much complete
across the government, and it is intended that, through a staggered roll-out, all PBs,
including EBUs, will be captured on the system.

Interventions to be included in strategy

Budget guidelines, e.g., the inclusion of the previous year’s outturn (a basic element in the
PEFA) and debt stock, financial assets, and summary of fiscal risks, all to be included, with
an explanation of budget implications and medium-term framework (currently partially
covered in the budget speech) made explicit underlying documents. This is a high priority, as
it represents a ‘quick win’. Capacity building also needs to be undertaken for the Budget,
Finance, and Planning Standing Committee at Parliament, so that this extra documentation is
used and improves the quality of decision-making. This capacity support should also include
parliamentary secretariat staff. (Strategy Plan P.II.1.1)
Improving access to fiscal information: Identify which units and departments are
responsible for producing outstanding documents (and reflect this responsibility in the
relevant financial manuals, guidelines, and directives). Prepare a short workplan to allow
publication of all documents (save, possibly, in-year reporting) within two years. Training and
awareness raising should be given to relevant parties so that the importance of publicizing
this information is well understood. (This is a medium priority). (Strategy Plan P.1.2)
Raising awareness of public financial information issues. This includes among public
servants across PBs who have a responsibility to work with central authorities (principally the
MoF and MoPD) to produce key information, and among a broad spectrum of stakeholders
which can play an enhanced role in holding government to account (elected representatives,
media, CSOs). (Strategy Plan P.II.1.3)
Capturing of EBU data: Revision of guidelines (and Public Finance Administration
proclamation) to guide how revenue and expenditure from EBUs can be captured. Ensure
that the inclusion of these entities is clear in the IFMIS roll-out strategy. (This is a medium
priority). (Strategy Plan P.II.2.1)
Service delivery data: Regulatory change to identify the Ministry of Planning and
Development as the focal point for the coordination of the production of service delivery data
across sectors. Development of standard format for sector service delivery reports. Each
sector to provide reports, which will be consolidated by MoF and published on the website.
(There is an opportunity to build on existing data in key sectors, so it should be a high
priority. Clear opportunity to radically improve PEFA performance in this dimension within 2-3
years). (Strategy Plan P.II.3.1)

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Pillar III: Management of assets and liabilities

Issues identified
Monitoring of public corporations needs to be strengthened. Good practice requires the
annual financial statements of all public corporations to be published within six months of the
end of the fiscal year, and a consolidated financial performance is published by the
government annually. The PEFA reported that 99.6% (by value) of public corporations submit
their annual financial statements to both the government and OFAG between two to five
years after the end of the financial year, but only 0.4% (by value) submit their reports within
six months of the end of the financial year. In an attempt to improve oversight in this area,
the Ethiopian Investment Holdings body (EIH) has been established, and there appears to
have been a shift of responsibility for monitoring state-owned enterprises (SOEs) that are
transferred to EIH (although not all SOEs fall into this category). Existing challenges are:

• A lack of clarity regarding the scope of EIH. Some institutions fall under its purview,
whilst others do not;
• A lack of clarity around how, explicitly, SOEs are to be monitored, in particular, in
respect of risks and liabilities they might pose;
• A lack of clarity around how MoF consolidates and publicises the financial statements
of SOEs, including those under EIH;
• A lack of capacity within some of these institutions regarding the recognition and
accounting treatment of some categories of financial assets, such as investments and
contingent liabilities, in line with international standards. Additionally, for some SOEs,
producing IFRS-based audited annual statements in a timely manner also remains
challenging.
Consolidated audited financial statements of subnational governments (SNGs) are not
published in a timely manner. Annual financial statements of regional governments are
submitted to Federal Government, but the reports are not published, and there are no
guidelines for the preparation of consolidated reports. There is also a significant delay in the
publication of the audited reports of each region. The roll-out of IBEX to regional
governments will positively impact the roll-out of IFMIS to the regions. However, currently, a
constraint is the migration of data produced on IBEX platforms to IFMIS-based reports. The
IFMIS directorate of MoF is developing a tool to migrate IBEX data from regional
governments into the IFMIS to ensure the timely consolidation of SNGs’ audited financial
statements. However, the SNGs are still using the IBEX system, and current arrangements
for consolidation are cumbersome and time-consuming.
Quantified and consolidated contingent liabilities and other fiscal risk of the
Government are not published annually. A fiscal risk report is not prepared. This report
should include information on contingent liabilities from Government programmes and
projects, including EBUs, government guarantees for SOEs, PPP, and other entities.
Investment management needs strengthening. The PEFA reported that major capital
projects are often included in the budget without any supporting economic analysis. The
selection criteria are primarily based on an application of government priorities. They are
performed at the Council of Minister level, as opposed to applying systematic criteria such as
desirability, achievability, and viability. Public investment projects do not have a complete
comprehensive costing framework that includes both the cost of the project and forward-
linked recurrent expenditures, and there is no forward-linked information in the MTEF. Since
the PEFA, the Public Investment Management Directorate of the Ministry of Planning and
Development has been strengthened and is more effective. It now reviews public investment

24
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projects before inclusion in the budget. The Proclamation on Public Investment Management
has been enacted21, and the MoPD developed various public investment management
guidelines. However, there are still some capacity constraints, a need to employ qualified
personnel and technology, and a need to build the staff capacity to conduct economic
analysis in line with good practice. The respective roles of MoF and MoPD in prioritizing
proposed public investment, including public-private partnership (PPP) projects, need to be
coordinated and streamlined to ensure projects are selected according to the priorities of the
National Development Plan. There is also an issue with awareness and enforcement of the
requirement for PBs to submit capital proposals for analysis. PBs are not sending their
proposals (despite the early call by the MoPD) in a timely manner, creating pressure at the
time of budget compilation.
There are also several challenges around asset management, namely:

• The Government does not maintain a record of its holdings in all categories of
financial assets and doesn’t maintain a comprehensive and consolidated
register of its non-financial assets.
• The value of Government Investment in SOEs and other companies is not
recorded and recognized at fair or market value, and information on the portfolio of
financial support is not published annually.
• Asset registers at the PB level do not provide information on the age and usage
of the assets. Some entities now perform a valuation of buildings and include them
in asset registers. However, there are no policies or procedures which require the
registration of some of the financial assets and consolidation of non-financial holdings
of all kinds, including land, infrastructure, and subsoil assets. This will need to be
resolved as part of the IFMIS roll-out.

Interventions to be included in strategy

There needs to be a clear policy developed and promulgated concerning the
responsibilities around the monitoring of SOEs. This is a high priority. (Strategy Plan
P.III.1.1)
Regarding SNGs’ consolidated audited annual financial statements, the financial
reporting guidelines should be revised to address the timeliness of preparing and publishing
the consolidated financial statements. This can be achieved relatively easily and should be
accorded high priority. Issues around the consolidation of SNG statements are more
complex, but in the short term, will be resolved by the ongoing development of the tool to
extract IBEX data and, in the longer term, by the comprehensive roll-out of IFMIS. (Strategy
Plan P.III.2.1)
Fiscal Risk Reports: There should be a revision of the reporting guideline of the Budget
Directorate to include fiscal risk reports as one of its deliverables. There will need to be
initiatives to build the capacity of the Debt Directorate to produce fiscal risk reports annually,
which includes the fiscal risks from SOEs, SNGs, EBFs, and Climate change, among
others22. This might include exposure to good international practice through study tours and
mentoring. Reforms need to be sequenced, with the development of guidelines (high priority)
preceding capacity development and promulgation (in the outer years of the strategy).
(Strategy Plan P.III.3.1)

21
Public Investment Management Proclamation No 1210/2020
22
There was a fiscal risk statement produced in 2019 which included a section on the risks posed by natural
disasters. This was not made public, but lessons from this exercise might guide the way forward.

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Public Investment Management: Deficiencies in assessing the efficiency and effectiveness

of prioritization of public investment proposals before being included in the capital budget
need to be addressed as a matter of priority. A medium-term Public Investment Plan
Framework in line with the national strategy must also be developed. For this to be effective,
the capacity at MoPD needs to be sufficient. An independent assessment of the capacity of
MoPD in discharging its PIM responsibility in light of the PIM proclamation planning for the
capacity development plan should therefore be undertaken to assess the extent to which
there may be capacity gaps and implementation of the same. Production and publishing pre-
feasibility, feasibility, midterm, final, and ex-post project evaluations need to be made more
effective, perhaps through experience sharing with other countries. A project management
database might also be developed. There also need to be initiatives to raise awareness of
PIM issues with PBs to ensure compliance with the proclamation, i.e., the need to have all
capital project proposals assessed in a timely and appropriate manner. A regulation
supporting the proclamation might also be developed. Capacity also needs to be built to
perform in-depth climate and gender aspects of project proposals and should be part of the
project prioritisation process. (Strategy Plan P.III.4.1)
Public Asset Management: Consideration needs to be given to establishing a Public Asset
Management Unit in the MoF responsible for recording, consolidating, and monitoring public
assets. Existing property management manuals need to be assessed to address limitations
in thresholds, capturing of project assets, use of IFMIS, and consolidation reporting. To
ensure the appropriate calibre of staff involved in this area, there should be an upward
revision of professional qualification requirements of positions responsible for public asset
management. In the short term, strict registration of assets in IFMIS and validation of records
should be a top priority (requiring awareness-raising activities). In the long term, asset
recording should be in alignment with IPSAS implementation roadmaps. Capacity building in
public asset management will be required over the short to medium term. (Strategy Plan
P.III.5.1)

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Pillar IV: Policy-based fiscal strategy and budgeting

Issues identified
A fiscal strategy and reports of fiscal outcomes were unavailable at the time of the
PEFA. However, work on this is now ongoing. A fiscal strategy developed based on
macroeconomic and fiscal forecast and assessment of the fiscal impact of revenue and
expenditure policy proposals is instrumental to ensure greater predictability of budget
allocations. A Fiscal Strategy is under development, which includes qualitative fiscal policy
objectives. It is expected that the strategy document will be available within the next six
months and, once developed, needs to be reported periodically.
Medium-term expenditure estimates are incomplete. The annual budget document
contains only the budget year estimates. The preparation of medium-term estimates is
intended to strengthen fiscal discipline and improve predictability of budget allocations. Good
practice requires a budget estimate of the following two fiscal years allocated by
administrative, economic, and programme (or functional) classifications.
Medium-term expenditure ceiling approval. The Council of Ministers approves the
budget’s aggregate and ministry-level expenditure ceilings after the Budget Call Circular is
issued to budgetary units. Good practice requires expenditure ceilings for the budget year,
and the two following fiscal years are approved by the government before the first budget
circular is issued.
Alignment of Strategic plans and budgets. Due to the unavailability of sector strategies of
some key PBs and sectors, it was impossible to assess whether the annual strategic goals
aligned with the budget.
The number of days available for the legislature to review annual budget proposals is
30 days, whereas good practice requires at least two months. It should be stressed that the
Budget, Finance, and Planning Standing Committee (BFPC) appears to be comfortable with
the current arrangements. However, the number of days might not be sufficient if more
documents are to be seen in line with good practice.

Interventions to be included in strategy

The fiscal impact of policy proposals, fiscal strategy, and reports of fiscal outcomes:
The capacity of the Fiscal Policy Directorate is already being developed through FCDO
intervention and needs to continue. Plans should be put in place to publish the Macro Fiscal
Sensitivity Analysis. A guideline should also be developed, focusing on the timely preparation
and publication of the various reports of the Fiscal Policy Directorate. (Strategy Plan
P.IV.1.1)
Medium-term expenditure estimates: Assessing the feasibility of producing two more
years of expenditure estimates to be included in the annual budget. This is a relatively
complex reform, requiring multi-year effort across PDs. Capacity will need to be developed at
PB and Budget Directorate level, and budget manuals and the legal framework should be
revised. As a starting point, it is suggested that a feasibility study should be conducted,
setting out a sequenced plan for rolling out these reforms. (Strategy Plan P.IV.2.1)
Medium-term expenditure ceilings: To conduct a high-level discussion with the Macro
Committee to get expenditure ceilings approved in a timely manner, thereby ensuring that
annual budget circulars are issued after the expenditure ceiling is approved. Plan for
capacity building of the Budget Directorate to produce additional expenditure ceilings for the
next two years. This is a medium priority. (Strategy Plan P.IV.3.1)

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Sector Strategies need to be produced for all sectors. These are currently available for
some sectors but not all. The MoPD should establish a website where sector strategic plans,
mid-term sector strategy reviews, and M&E reports, among others, are accessible to the
public (this is a high priority). The Budget Directorate and PBs then need to ensure that
budget proposals are in line with strategies and that sector strategies align with national
strategy. This requires capacity building with PB planning functions, MoF and MoPD.
(Strategy Plan P.IV.4.1)
Timing of submission of the budget proposal: A study should be conducted to look at the
feasibility of revising the budget calendar in line with best practices to allow the Budget and
Finance Standing Committee to have two months to review the budget proposal. In addition,
the capacity of the committee members and parliamentary secretariat staff needs to be
enhanced so that the Parliament can review more budget documents in line with best
practices. Experience sharing from other countries on the budget scrutiny processes, the
documentation, public participation, and other matters and determining whether two more
months are required to meet good practice. (Strategy Plan P.IV.5.1)
There needs to be a tax policy framework which promotes the policy priorities of Ethiopia’s
CRGE. This will include looking at options on how taxes might be levied on polluters. It also
requires consideration of any impact that revenue policies have on climate change mitigation.
New policies need to be assessed against potential climate impact. And ultimately, a Carbon
Tax policy needs to be formulated. (Strategy Plan P.IV.6.1)

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Pillar V: Predictability and control in budget execution

Issues identified
REVENUE
In common with some areas of public financial management, revenue management is
currently undergoing key reforms to IT platforms23 which seeks to modernise the practice and
improve the consolidation and modernisation of data. Given that this has a public portal, this
also addresses some challenges around access to information faced by taxpayers.
Nevertheless, several challenges still obtain, including:

• Revenue Risk Management. The PEFA assessment notes that the Ministry of
Revenue uses ‘…a partly structured and systematic approach for assessing and
prioritising compliance risk’. Whilst some risk assessment is undertaken it is not fully
systemic and at the core of MoR working practices.
• Revenue Arrears monitoring: Complete information on tax arrears is not produced
and published, and some arrears data appears unreliable. Similarly, revenue
accounts reconciliations, which are produced monthly, do not include assessments
and arrears, only collections and transfers to the Treasury.
• Revenue collection information: There are monthly reports which cover tax
revenue collected (produced by MoR), but this is only approximately 81% of domestic
revenues. Non-tax revenue collection information is not periodically reported. What
hampers reporting from PBs into MoR is a weakness in the regulatory framework;
there is a need to tighten requirements around the periodic reporting of revenue
collected by PBs.
• A tax expenditure report was not available at the time of the PEFA. Such a report
covers MoR’s activities, results, plans, and other tax-related information. Such a
report was produced in 2020, and steps now need to be taken to ensure that its
production is institutionalised for future years
• Revenue estimation: There is a need24 to improve revenue estimation processes,
with revenue potential properly assessed and forecasting models (supported by
software) refined. In the case of non-tax revenue, there is also a need to improve
revenue projections of PBs who collect revenue so that the revenue budget has a
sounder basis. But this needs to be backed by changes in the policy and regulatory
framework.
• Assessment of tax revenue management: In 2016, a Tax Administration
Diagnostic Assessment Tool (TADAT) assessment was undertaken. The assessment
covered a wide range of taxation issues, including taxpayer registration, risk
management, compliance, timeliness of declaration and tax payments, the accuracy
of declaration, dispute resolution, revenue management, accountability, and
transparency. Whilst the report is old, some of the issues highlighted are still relevant.
At the time, no action plan was developed to address issues raised by the
assessment.
• Information regarding Tax appeals: Information relating to taxpayer appeals was
not in the public domain at the time of the PEFA review. Nevertheless, such

23
A Tax Transformation Programme supported by the UK began in 2018. A Tax Administration Support System
(TASS) has been operational since 2020. A web portal enables taxpayers to access e-filing and e-payments. This
platform replaces the SIGTAS system.
24
This need was identified by the Ministry of Revenue itself rather than the PEFA or TADAT assessment

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information is available, and it has been confirmed that this can be published if
required.

PREDICTABILITY OF IN-YEAR RESOURCE ALLOCATION

Ongoing reform in this area has been the roll-out of a new IFMIS system, replacing the IBEX
platform. This has a number of implications for cash management.
The consolidation of Cash Balances remains an issue: Good practice requires that all
government cash and bank balances be consolidated on a daily basis, if not weekly. As of
2019 (when the PEFA review was undertaken), 76% of the cash balance was calculated on a
monthly basis. In the future, the roll-out of IFMIS will improve the capability of PBs to produce
daily consolidated cash balances information for MoF. (However, those PBs still on IBEX
remain a challenge, although these are reducing rapidly). The introduction of e-payment is
expected to ensure improved timeliness of payment transaction entries. One challenge that
remains relates to the use of ZBA (bank accounts which are zeroed at the end of each
working day as part of consolidation into the Treasury Single Account). Not all entities are yet
on the ZBA system, which hampers the Treasury’s ability to form a consolidated daily view of
cash holdings.
An issue picked up by the PEFA was the significance of in-year budget adjustments:
In-year adjustments to budget allocations frequently occur. These are not untransparent or
ultra vires (the legislative framework gives MoF discretion to make reallocations among
ministries and programmes within the approved total expenditure). However, the sheer
volume of reallocations poses questions relating to the credibility of initial budget allocations.
This may, in part, be due to a lack of capacity at the PB level to budget effectively (an issue
on which CABRI25 has also commented and the lack of time that PBs feel they have to work
on draft budget proposals).
PAYROLL
The roll-out of the IFMIS system, with its associated payroll and HR modules, has positively
impacted the strength of internal controls in respect of emolument payments. However, it
was noted in the PEFA that a comprehensive payroll audit had not been conducted for any
central government entity in the last three fiscal years. The view of both OFAG and the
Inspection Directorate is that the routine scrutiny of payroll transactions as part of the final
accounts audit provides the appropriate audit coverage. This is not consistent with good
practice (where more intensive verification is periodically performed, e.g., to identify ghost
workers), and it has been established that comprehensive payroll reviews can be undertaken
by Internal Audit Units and OFAG, although these do not feature in current plans.
PROCUREMENT
The PEFA review noted that most central government institutions do not maintain databases
for procurement activities. The public does not access procurement information, including
government procurement plans, contract awards, data on resolutions of procurement
complaints, and annual procurement statistics. The Methodology for Assessing Procurement
Systems (MAPS) assessment, undertaken in 2019, identified inconsistency with procurement
laws, poor engagement of CSOs, inadequate monitoring and evaluation, and an inaccessible
appeal system. A five-year action plan was generated by the World Bank (which was

25
CABRI PFM Capability Assessment Report No 3, 2020

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working with the Federal Public Procurement and Property Administration Agency to address
challenges identified by the review). Implementation of this has now started, and progress for
implementation should be reviewed on a rolling basis by the PFM Strategy Steering
Committee
A critical reform in the area of procurement is the roll-out of e-GP, an electronic procurement
platform, which stands to address a number of weaknesses identified by the PEFA and
MAPS assessments. It is currently being piloted. The Federal Public Procurement and
Property Administration Agency (FPPPA) plans to roll out e-GP with sixty more entities in the
coming three years. However, although developed, the full roll-out strategy is not yet fully
funded.
INTERNAL CONTROLS ON NON-SALARY EXPENDITURE
Effectiveness of expenditure commitment controls and arrears: The PEFA found
certain instances where BIs could not pay committed expenditures to contractors due to the
unavailability of cash. It appears that whilst there is a strict regime of cash rationing,
commitment controls are not used in the IFMIS. Linking commitments to cash availability
would eliminate the possibility of in-year arrears.
Arrears information: Data on the stock and composition of expenditure arrears are only
available annually at the end of each fiscal period but not monthly. Interviews with
government counterparts across PBs confirmed that expenditure arrears do not naturally
build up over the year. All commitments are based on cash availability. The only possible
arrears that exist are at year-end, with goods received but not yet paid for. These instances
will be better captured once IPSAS accounting is fully introduced.
INTERNAL AUDIT
Nature of internal audits, standards applied, and management response: Internal audit
functions mainly focus on compliance rather than systemic audits. A consolidated
performance audit report was not available. Internal auditor turnover was significant, which
affected the audit coverage. In 2019, management response to internal audits was just 26%
of reports issued. Since the PEFA, internal audit positions have apparently been downgraded
throughout the government, and there are now significant staffing and retention issues.

Interventions to be included in strategy

REVENUE

• Revenue risk management: A review of risk management at MoR should be

undertaken, with a view to targeted assistance to strengthen the capacity of risk
assessment and prioritisation. This can be repeated every other year. (Strategy Plan
P.V.1.1)
• Non-tax revenue report and collection: A review of existing legal frameworks
relating to non-tax revenue collections (those outside the mandate of MoR) should be
undertaken. A regulatory framework to ensure that the Treasury Department is
supplied with revenue projections and collection information in a timely manner
should be issued. If necessary, training can be given to PBs who collect revenue on
the development of appropriately robust projections. A plan should be developed to
ensure that all PBs can provide monthly reports from year 2 or 3 of the strategic plan.
(Strategy Plan P.V.1.2)
• Tax Arrears recording, reporting, and reconciliation: An assessment needs to be
undertaken to review the current tax arrears recording, monitoring, and reporting

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practices, with a view to developing an improvement plan to achieve quality and

reliable arrears recording and reporting and reconciliation practices between MoR
and MoF. MoR to establish a procedure and a capacity-building plan for publishing
key tax information, including Tax Arrears reports, cost-benefit analysis of tax
expenditures, tax appeal decisions, and annual performance reports of MoR.
Assessing the quality of the taxpayer’' database and developing an implementation
plan to improve the quality of the database. (Strategy Plan P.V.1.3)
• A review should be undertaken of the TADAT findings (Annex III), and any
outstanding issues integrated into the current reform plans of MoR. (Strategy Plan
P.V.1.4)
• A Tax Expenditure Report should be produced annually from now on. The UK’s
current support can ensure that this is institutionalised within MoR. (Strategy Plan
P.V.1.5)
• Provision needs to be made to publish the results of taxation appeals. (Strategy
Plan P.V.1.3.3)
PREDICTABILITY OF IN-YEAR RESOURCE ALLOCATION

• Enhancing predictability of in-year resource allocation: Extending ZBA to the

branches of PBs. Allowing access to the Treasury to access all bank accounts and
explore possibilities where cash balances can be reconciled daily (for those accounts
outside the TSA). Negotiating with NBE and CBE and planning towards achieving
capabilities to access all bank accounts in order to produce a consolidated cash
balance report daily. (Strategy Plan P.V.2.1.1)
• Regarding consolidation of cash balances, discussions should take place between
MoF and CBE to speed up the transfer of revenues collected by MoR into the
Treasury Central Account instantly and avoid delays of one or more days. (Strategy
Plan P.V.2.1.2)
• Budget reallocations can be reduced if budgets are initially realistic and robust.
Therefore, it is important to build the capacity of budget experts so that they can be
able to prepare realistic annual budgets and restrict the number of in-year budget
adjustments. (Strategy Plan P.V.2.2)
PAYROLL

The OFAG and Inspection Directorate should develop an audit programme for a
comprehensive payroll audit and implement on a rolling basis across PBs, so that each
entity is covered once every two years. If needed some technical assistance should be
provided in this area. (Strategy Plan P.V.3.1)
PROCUREMENT
Implementing the roll-out strategy (revising as required) for e-GP, focusing on how the
system can be used to improve monitoring, evaluating, and managing public procurements.
Seek clarity regarding the funding of the roll-out. (Strategy Plan P.V.4.1.1, P.V.4.1.2)
Review the legal framework to address any inconsistency identified in the MAPS
(Annex IV) report and procurements related to projects financed internationally. (Strategy
Plan P.V.4.1.3)
Develop terms of reference and consider revising the existing procurement regulations to
establish an independent complaints review board. (Strategy Plan P.V.4.1.4, P.V.4.1.5)

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Develop a framework to enhance CSOs’ engagement in the procurement cycle, in

particular, through the monitoring of contract awards. (Strategy Plan P.V.4.2)
Implement MAPS action plan (Annex IV). Ensure that the MAPS action plan is monitored
as part of overall PFM Strategy implementation.
Undertake rolling training to strengthen procurement efficiency, continuing with
procurement professionalization whilst addressing structural issues contributing to the
turnover of procurement personnel. (Strategy Plan P.V.4.1.3 and cross-referenced to Pillar 8)
Ensure that procurement procedures reflect a good practice approach to climate
change issues and reflects sustainability, ensuring that procurement staff are trained on
sustainability issues, and revising guidelines and contracts to ensure that climate-related
risks are understood and, where possible, mitigated (Strategy Plan P.V.4.3.)
INTERNAL CONTROLS OVER NON-SALARY EXPENDITURE
Effectiveness of commitment controls. To avoid the situation where commitments cannot
be paid because of a lack of cash, cash modules and commitment modules of the IFMIS
need to be linked. IFMIS now uses a commitment facility (unlike IBEX) but only checks
commitments against available budget allocations. This needs to be re-visited. A quick
review needs to be undertaken to confirm that this is indeed the case. (Strategy Plan
P.V.6.1)
Internal Audit and Internal Control over non-salary expenditure:

• Internal Audit Units and the Inspection Directorate's capacity need to be enhanced,
and the professionalism of internal audit addressed. (Strategy Plan P.V.6.1.1,
P.V.6.1.2, P.V.6.1.5)
• Awareness training should be given to senior management of PBs to inculcate a full
understanding of the role of internal audit and its function as a support to
management. (Strategy Plan P.V.6.1.4)
• Response mechanisms to internal audit reports should be reviewed and
institutionalised. To strengthen the application of internal audit standards and
encourage risk-based auditing, organisational level risk assessment is to be practised
at the PBs level, led by the PBs respective heads, and audit programs to be based on
such risk assessments. Implement the IFMIS roll-out strategy and amend it if
necessary. (Strategy Plan, P.V.6.2)

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Pillar VI: Accounting and Reporting

Issues identified
Huge balances on advance accounts remain uncleared. The PEFA identified a balance
of ETB 70.9 billion of uncleared advances as of June 2018, and by 2021 the balance had
more than doubled to ETB 165 billion. The situation is exacerbated by there being no specific
unit at the MoF level to monitor and reconcile the stock of advances.
There is no consolidation at the central government level of in-year reports comparing
actual expenditure with the budget. BIs prepare financial reports, and these are submitted
to the MoF, but they are not consolidated. This should be improved with the complete roll-out
of the IFMIS across all BIs and PBs, although challenges around maintaining data in a timely
manner across PBs might be illuminated and will impact the quality of data.
The annual financial reports are incomplete; they do not include information on tangible
assets and guarantees. Fixed assets are now recorded routinely in IFMIS on acquisition.
However, existing high-value fixed assets (buildings, etc.) and work in progress
(construction) have yet to be valued.
The public accounts of the Federal Government are not prepared using any specific
international accounting standards. Federal Government has agreed internally on a
process where International Public Sector Accounting Standards (IPSAS) will be rolled out.
This lays the groundwork for a move to accruals accounting. This is a significant and
complex reform.
The Chart of Accounts used in the IFMIS needs to comply with current international
standards. Government’s Budget Classification merited a “B” rating in the PEFA, but this
was based on the Budget Classification Structure (BCS) and Chart of Accounts (CoA)
embedded in the IBEX system, given the time of assessment. Assurance is now needed that
the new BCS and CoA conforms to the latest international standards (GFMS 2014) and IMF
Technical Notes, and facilitates Programme Based Budgeting.

Interventions to be included in strategy

A multi-pronged approach is recommended for advances. Firstly, awareness needs to
be at the PB level for the monitoring of advances. Some training needs to be given.
Secondly, there needs to be a clear allocation of responsibility at MoF for ensuring oversight
across PBs. Thirdly, steps should be taken to ensure systematic coverage of these issues in
internal and external audit programmes. To fully institutionalise, financial regulations need to
be revisited. (Strategy Plan P.VI.1.1)
In-year report consolidation will become easier once all BIs are using the same IT
platform, so this is another area where the completion of a timely roll-out of the IFMIS will
have a positive impact. This is a high priority. To ensure the reliability of in-year financial
reports, PBs should ensure that data are entered into IFMIS in a timely manner and are
accurate and up to date. A review of the workload and duties of the Government Accounting
Unit should also be undertaken. Although not impacting the timeliness of reporting (but rather
its accuracy), some attention should be given to ensuring the integrity and currency of data in
the IFMIS (or IBEX) system, and Internal Audit should regularly review this issue across PBs.
(Strategy Plan P.VI.2.1)
IFMIS roll-out will also affect the accounting for assets. Further support can be given to
the valuation and accounting for assets, and this will also be needed if a full transition to
IPSAS is also to be affected. See below. (Strategy Plan P.VI.3.1)

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The transition to IPSAS needs to be reinvigorated and accelerated. The current draft
roadmap needs to be updated and validated, and appropriate technical assistance needs to
be scoped and identified. Part of this process needs to focus on improving the financial
report of PBs to be as informative as possible and include both standard financial statements
and disclosures. Experience sharing with countries that have followed a similar route should
be considered. (Strategy Plan P.VI.4.1)
An assessment should now be undertaken of the new BCS/CoA included in the IFMIS
system to ensure compliance with GFSM 2014 standards, IMF Technical Notes, and that the
BCS supports Programme Based Budgeting (and possibly links to development plan
priorities). (Strategy Plan P VI.5)

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Pillar VII: External scrutiny and audit

Issues identified
The Financial independence of the Office of the Federal Auditor General (OFAG) is
somewhat compromised. OFAG is independent in most respects but still has its budget
ceiling determined by MoF rather than having a separate parliamentary appropriation. This
issue is linked to a more general one surrounding the governance of the audit function. In
May 2018, the Parliament enacted Regulation No. 8/2018: Administration of Employees of
the OFAG, which provides OFAG independence with the budget issue and salary and
benefits of staff. The regulation was issued on December 25, 2018. According to the
regulation (Articles 40 and 71), an independent audit commission which oversees the budget
and organisation structure, staff salary, and benefits will be established. However, this
Commission is still not functional, so OFAG is still dependent on MoF for appropriations.
Hearings of the Public Accounts Committee are held to discuss audit findings, but
these are only for a proportion of audit reports. In 2018/19, only 10% of reports which
gave an adverse opinion or a disclaimer were discussed. Since the 2019 PEFA, a new PAC
has been put in place, which is better resourced but needs capacity support (for both
members and the supporting secretariat). A strong PAC is vital to ensure the implementation
of findings and recommendations of OFAG.
The Office of the Federal Auditor General does not have a systematic report and
recommendation follow-up mechanism. Whilst a follow-up to the previous year’s audit is
included as part of the normal audit process, there is no systematic and documented follow-
up system. A tracking system is under development but has been work in progress for some
while26. This may at least partially explain why there are so many repeat findings in OFAG
reports, although the Ministry of Finance now levies fines on PBs which do not respond to
audit recommendations and findings.27
Whilst OFAG is a good performer, there is a risk that it will not be able to catch up with
recent developments. It reports the need to be able to audit in a computerised environment,
particularly given the roll-out of the IFMIS. It requires online access and the ability to
scrutinise records properly, ideally using computer audit-assisted techniques. The
organisation’s capacity to undertake IT audit also needs to be enhanced, reflecting the
enhanced digitisation of government services, including the IFMIS, but also the e-GP and
Ethiopian Government Electronic Services Portal, The roll-out of IPSAS, particularly in
respect of asset accounting, will also require capacity support for those auditing the resulting
financial statements.
Parliamentary capacity also needs to be enhanced in relaton to its understanding of
PFM matters. It has a vital role in reviewing draft legislation, but needs to be able to assess
all proposals against an understanding of good PFM practice, and with consideration of the
impact of any proposed legislation against existing laws.

26
The system was piloted in some federal agencies. It links the public accounts committee, OFAG and the
auditee institution online and facilitates audit recommendation follow-up by these agencies. However, it has not
been fully rolled out.
27
Proclamation No 970/2016, Article 72 allows for the head of a PD to be fined between ETB 5,000 and 10,000
for failure to respond. If this happens more than three times, the head faces dismissal.

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Interventions to be included in strategy

Acceleration of the proper promulgation of the new Audit Board and consideration of
budget appropriation issues for OFAG. This should include consideration of a number of
options, including setting the overall ceiling for OFAG as a percentage of the overall general
appropriation. (Strategy Plan P.VII.1.1)
The development of a guidance note (for all PBs) about responses to reports, including
desired timelines and possible sanctions if these are not respected. This should be
supported by the roll-out of PFM awareness training for senior management, which should
be mandatory for both new appointees and incumbents. (Strategy Plan P.VII.1.2.1)
The review of legislation and regulations to reflect these changes, perhaps with a new
supporting regulation. (Strategy Plan P.VII.1.2.2)
The roll-out of a tracking system for audit recommendations. (Strategy Plan P.VII.1.2.3)
A full review of the Public Accounts Committee, with potential support to build its
members’ and secretariat’s capacity. (Strategy Plan P.VII.2)
It is also recommended that capacity assistance continues for OFAG. Whilst this
element performed reasonably well in the PEFA assessment, this is a fast-moving area, and
it is incumbent on the office to keep abreast of professional development. There are
particular topics which may need attention in the future, including auditing the use of the new
IFMIS and financial statements prepared under IPSAS. There is also a need to mainstream
climate change issues and ‘green finance’ into audit activities, particularly in the area of
performance audit. (Strategy Plan P.VII.1.4)
To enhance the impact of audit work, the media sector and NGOs need to be more
aware of and better understand the work of OFAG and play a role in enhancing
accountability. A programme of training needs to be developed and rolled out. (Strategic
Plan P.VII.3)
Parliamentary capacity needs to be enhanced to review draft legislation to ensure that good
PFM practice is reflected and impact on existing laws and policies is assessed. A programme
of training needs to be developed and rolled out. (Strategic Plan P VII 2.3.1)

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Pillar VIII: Cross-cutting Issues

Introduction
This pillar, used in addition to the seven pillars that set out the full budget cycle, gathers
together some cross-cutting issues that need to be addressed if a holistic approach is to be
taken to PFM. Some of these issues – gender, climate change and fiscal federalism– reflect
how three significant policy issues can be reflected in PFM reform, facilitating a policy
framework that ensures the pressing issues are addressed. Some – professionalisation and
raising financial management literacy – are underlying issues which, when addressed, will
have a positive catalysing impact on the progress of PFM reform and overall public sector
institutional performance.
Where possible, interventions identified by this analysis have been mainstreamed into the
actions for Pillars I to VII. For example, training of parliamentarians on issues related to
gender and climate. Where there is not possible – where actions are truly stand alone in
terms of their execution – these have been set out in a matrix section for Pillar VIII.

Issues Identified
GENDER RESPONSIVE BUDGETING
Although there is awareness of the issue of ensuring that budgets are gender-responsive,
concrete actions have not yet been taken to institutionalise GRB into the planning and
budgeting process. A National GRB guideline was developed by the MoF in 2012 in
collaboration with UN Women, and training was delivered to sector Budget Institutions on
integrating gender responsiveness into the budget. In 2016 the Federal Government of
Ethiopia’s Financial Administration proclamation was amended to highlight the need to
consider gender issues during public budget preparation. In 2022 the World Bank and GoE
published a gendered fiscal incidence analytics looking at the differences in the welfare
impact of taxes and government spending on men and women 28. However, GRB-relevant
interventions currently remain fragmented and have limited efficacy.
CLIMATE RESPONSIVE PUBLIC FINANCIAL MANAGEMENT
Whilst Ethiopia has embraced policies to tackle climate change, starting with the Climate
Resilient Green Economy (CRGE) policy in 2011, public finances are not monitored with a
view to establishing the extent to which these policies have been delivered, and there is
little to link climate-related policy aspirations to the budget cycle. Budget circulars are
currently silent on how any proposed budget or expenditure should be linked to, appraised
against or identified using mitigation and adaptation criteria. Mechanisms to track and report
on climate-related expenditure are being developed29, but this needs to be followed
through, and any appraisal and prioritization of investment expenditure only embraces
climate if funded by a donor who expressly demands such. The procurement legislative and
regulatory framework is also silent on how green policies might be supported. For asset
management, there are no guidelines around managing and reporting climate sensitive-

28
Ambel, Alemayehu A., Wondimagegn M. Tesfaye, and Manex B. Yonis. "A Gendered Fiscal Incidence Analysis
for Ethiopia." (2022).
29
The UK funded BRE Programme is working with the MoF’s IFMIS Directorate to integrate this tagging into the
IFMIS

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assets30. Debt information does not include any climate change related data. In terms of
revenue policy, there is no carbon tax policy yet in place (although carbon tax studies have
been undertaken31), and new revenue measures are not assessed for any climate impact. In
terms of legislative scrutiny of the budget, elected members have no capacity to review
budgetary proposals to determine whether or not they are climate smart.
Consideration should now be given to how, bit by bit and incrementally, rather than as a ‘big
bang’ implementation, the budget cycle at the federal level can be made ‘climate smart’. It is
understood that there will be actions in the forthcoming Disaster Risk Financing Strategy that
will all be about strengthening existing PFM practices to be climate - and disaster-smart.
These need to be mainstreamed into the overall PFM plan.
PROFESSIONALISATION
At the heart of any reform strategy is an acceptance that institutions are not behaving
optimally – in other words, that there are issues and challenges – and that this behaviour can
be changed or improved. This holds true for this PFM strategy, which identifies (through a
synthesis of consultation and analysis of various diagnostic documents) a series of issues
and sets out how these might be addressed or corrected. Essential to changing institutional
behaviour, however, is changing the behaviour of individuals who work within these
institutional frameworks.
A theme which genuinely cuts across the analysis of current PFM systems is that individuals
–due to either ignorance or malintent – fail to do what good practice expects of them.
An essential part of tackling this is to look at professionalising the PFM sector. Currently, two
fundamental facets which help mould behaviour appear to be missing. Firstly, there are no
definitive professional standards that govern how procedures and practices should be
followed and applied. The absence of codified, universally recognised Ethiopian Standards
means that those working in the sector lack guidance, and as a result, different ‘ways of
working’ might prevail. These standards would set out the nuts and bolts of ‘how to’ do
something. Secondly, there is no common understanding and codification of a universally
accepted code of ethics for those working in the PFM sector, setting out what, in terms of
behavioural norms, is expected of public officers and why.
It is suggested that addressing these challenges through a professionalisation programme
would have far-reaching consequences. Many of the challenges identified throughout the
strategy are challenges of compliance. A professionalisation programme would seek to
address this at the very core; policies and procedures might already exist, but they are,
sometimes ignored for various reasons. Professionalisation would teach practitioners how to
follow procedures and why they should. It would provide benchmarks for measuring
performance – both institutional and personal. And it would seek standardisation, bringing
together disparate initiatives (often supported by well-meaning but poorly coordinated donor
interventions) under a nationally owned, nationally driven, and contextually relevant

30
“Exposure and sensitivity of public lands, buildings, and infrastructures to climate variability, extreme weather
events and transition risks are identified for the relevant assets. Information is included in the register.
Contribution to emission and capture of GHG of relevant non-financial assets are identified. Procedures and rules
for the disposal, transfer,
and use of lands and subsoils provide climate related arrangements and are complied with.” Climate PEFA. This
might include roads and bridges which prematurely degrade due to exposure to the effects of climate-related
events.
31
Telaye Mengistu, Andualem, et al. "Exploring carbon pricing in developing countries: A macroeconomic
analysis in Ethiopia." Sustainability 11.16 (2019): 4395.

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professional framework, covering accounting, auditing, procurement, revenue collection and

accountability mechanisms. Linkages between PFM professionalisation and the Civil Service
Reform Roadmap (led by the Civil Service Commission) also need to be explored.
BUILDING FINANCIAL MANAGEMENT LITERACY ACROSS GOVERNMENT
The low level of public financial management literacy across all stakeholders involved in the
budget cycle has a number of implications. In particular:

• On the supply side, it impacts the reporting quality and compliance levels. A number
of issues identified across the budget cycle are down to non-compliance, and the
likely underlying cause is a lack of understanding of good PFM and accountability
principles. It also impacts how existing information – for example, budget execution
reports – are used as tools of management and are used in decision-making
processes which enhance the quality of instructional performance; and
• On the demand side, it impacts the level of expectations, not just from senior
managers to their staff, but also demand-side actors such as the media, CSOs and
parliamentarians on what can rightfully be asked for in terms of accountability and
financial management information.
ENHANCING FISCAL FEDERALISM

Ethiopia’s federal nature and the governance structures underpinning the state mean that
each region is largely responsible for its PFM arrangements and reform programmes, with
service delivery, accounted for at the woreda level. As part of the PEFA assessment exercise
of 2019, six regional entities were separately assessed using PEFA’s subnational
assessment framework (Amhara, Addis Ababa, Oromia, Somali Region, SNNPR and Tigray
were subsequently published). Familiar challenges - budget preparation processes and
subsequent reliability, the completeness of budget documentation, public asset and public
investment management, performance information on service delivery, public access to key
fiscal information, fiscal risk reporting, debt management, and the existence of fiscal strategy
documents – were identified. An additional challenge relates to the compliance by the
Regions with requirements of climate response, and reporting to Federal Government on
how funds allocated by transfers have been used in accordance with climate smart
principles.
Improvements in performance were often down to enhancements of IBEX (the IFMIS
platform still in place in the regions). But inherent weaknesses in that platform – principally
the integration of PFM function beyond budget and general ledger modules – will continue to
inhibit progress. For this reason, the IFMIS platform now in place at the federal level will be
rolled out across regions. This will be a critical reform for the federal government to support
and goes beyond the life of this strategy.
There is also recognition that due to recent internal conflicts and security operations, vital
PFM infrastructure has been destroyed or damaged. Whilst it is impossible to fully quantify
the task ahead, this strategy recognises that substantial rehabilitation and reconstruction will
be necessary.
MANAGING REFORM
It is recognised that an important element of success for the implementation of this strategy
is the capacity of government to manage the change and reform processes. At the heart of
this process is the Expenditure Management Reform Directorate (EMRD). With the new
strategy comes greater responsibility (given the holistic nature of the strategy and the need

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to keep on top of a detailed MEL framework). Currently EMRD is under-staffed and in need
of support.

Interventions to be included in the strategy

GENDER
To ensure linkages between budget initiatives with an overarching policy framework, a
review to establish what national gender policies are in place should be undertaken. GRB
budgeting guidelines then need to be linked to the strategy. (Strategy Plan P.VIII.1.1.1)
The clarification and revision of the policy framework is a complex process and likely to
require multi-year effort from PBs across the government.
It is recommended that the government should, in the meantime, capitalise on existing
momentum in relation to gender equality by implementing the below ‘quick-win’ approach,
which would contribute to creating solid ground for institutionalising the current GRB
guidelines and solving the key challenges outlined in the PEFA assessment. This involves:

• Establishing mechanisms for identifying non-compliance with BCC requirements around

gender targets. To do this, fiscal strategy and budgeting through a gender lens need to
be improved. (Strategy Plan P.VIII.1.1.2)
• Enhancing linkages between policy and budgeting by ensuring current national gender
equality goals are reflected in the. A first step to achieving this can be through publishing
annual gender budget statements, allowing national and PB level analysis of the extent
to which gender-related goals are being reached. Such a statement should be informed
by an ex-ante Gender Impact Assessment (GIA). (Strategy Plan P.VIII.2.1.1)
• Further, budget execution reports should incorporate a gender perspective by identifying
the year-to-date gender-related spending. While the above recommendation help
optimises resource allocation to gender equality, it can only achieve a positive outcome if
these allocations are spent. An ex-post GIA of the budget execution should be
conducted to assess whether the resources allocated to gender equality have been
spent and to assess the impact of programmes funded through the budget on men and
women. This will also help the government understand where the gaps are and inform
the design and modification of budget policies. (Strategy Plan P.VIII.1.1.2)
• The legislative budget committee should commission a review of how resources have
been used to deliver gender-related outcomes and should be capacitated to then
analyse such a review. (Strategy Plan P.VIII.1.1.2)
• Finally, capacity within OFAG should also be built to allow for the audit of the
promulgation of gender-related policies.
PROFESSIONALISATION
Work has already begun on professionalisation initiatives under the Accounting and Auditing
Board of Ethiopia (AABE). The work of the Board to set out clear sequenced plans to
inculcate professional and ethical standards into the PFM space must now be supported and
included as part of the Government’s PFM Reform Strategy. (Strategy Plan P.VIII.2.1.1)
Essential to the success of this is political support at the highest level. So far, this seems
forthcoming but needs to be maintained. Leaders in the sector should support maintaining
the profile of this work by demonstrating its relevance to the government’s delivery of its
policy framework. (Strategy Plan P.VIII.2.1.2)

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CLIMATE RESPONSIVE PUBLIC FINANCIAL MANAGEMENT

Budgeting
Responsibility needs to be assigned within the Ministry of Finance to ensure the ‘greening’ of
the budget. It is suggested that a Climate Change Unit be set up within the Budget
Directorate of the Ministry of Finance. (Strategy Plan P.VIII.3.1.1)
The sequenced reforms it should undertake will then include the following:

• An in-depth review of existing budgeting practices to better identify the gaps and
weaknesses currently evident; (Strategy Plan P.VIII.3.1.2)
• The development of assessment frameworks which should be applied to determine
the extent to which any budget proposals meet the government’s climate-related
policies (as well as the relevant sectoral policies); (Strategy Plan P.VIII.3.1.3)
• Steps to integrate climate change considerations into the budget circular. This will
guide PBs on how to integrate climate change into planning and budgeting
processes, including incorporating climate-related fiscal risks. (Strategy Plan
P.VIII.3.1.4)

Consideration should also be given as to how to implement actions recommended by the

upcoming Disaster Risk Financing Strategy, which aims to strengthen existing PFM practices
to make them climate mart.

In terms of sector policies, support intended to increase PB capacity to produce these should
include modules on making such policies climate smart. This will need the involvement of a
duly capacitated Ministry of Planning and Development.
Tracking climate related expenditure
The Ministry of Finance needs to follow up on the ongoing exercise to embed the climate
tagging methodology into the IFMIS. Support should be provided to the Ministry of Finance
(in maintaining the tagging framework) and PBs (who will be instrumental in identifying
climate-related expenditure). In addition, tagging initiatives should be introduced
incrementally, and once rolled out, an assessment should be undertaken to determine the
effectiveness and efficiency of the exercise in providing the required information to assess
performance against CRGE targets.
Climate related public expenditure reviews
The Ministry of Finance should be given assistance to commission and manage periodic
public expenditure reviews with the view of testing the alignment of budgets with climate
policy goals and impacts on climate outcomes. This should include tax expenditures and
subsidies. (Strategy Plan P.VIII.3.1.5)
Public Investment Management
A climate-smart approach needs to be integrated into ongoing PIM reforms. The Public
Investment Management proclamation stipulates that an environmental impact assessment
is needed as part of the review of investment projects. This does not go as far as performing
an assessment of projects through a climate lens, which will incorporate such issues as the
extent to which mitigation and adaptation principles have been reflected. Whilst
environmental impact guidelines have been drawn up by MoPD, these do not provide
guidance on how to assess the impact of significant proposed projects on national mitigation
targets and climate vulnerability. No detailed methodology is provided for project appraisal so

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that CC risks are to be addressed at the project design stage. International good practice
should be embraced, and a study of relevant approaches used elsewhere needs to begin the
process. This needs to include SOEs and EBFs.

Procurement
The current regulatory framework does not allow the taking into account of climate impacts of
any procurement decisions. As such, there is a need to develop a green procurement
framework. Ultimately legislative reform is required, but a series of incremental steps can be
followed. The ‘building blocks’ below are suggested as a starting point towards establishing
sustainable procurement practice.
Building Block 1 (Years 1 and 2 of the strategy period)
- Identify key green procurement champions. Procurement staff should receive
induction training in green procurement principles. Include green procurement
guidelines in the employee onboarding programme.
- Ensure that key contracts contain green criteria and that contract awards
should be based on value-for-money, not the lowest price.
- Identify critical climate-related impacts of the procurement process
Building Block 2 (Years 2 and 3 of the strategy period)
- Key staff should receive basic training on green procurement principles.
- climate-related risks should be assessed and used to inform prioritisation.
- Conduct a detailed appraisal of climate-related impacts of the procurement
process.
Building Block 3 (years 3 and 4 of the strategy period)
- Key staff should receive advanced training on green procurement principles.
- Provide refresher training to key procurement staff on the latest climate-
related procurement principles.
- Assess all contracts for climate-related risks and identify actions, particularly
for high-impact contracts.
- Undertake a life-cycle analysis.

Asset management
As part of the reforms around recording and monitoring assets, guidelines should be drawn
to clearly define what climate-sensitive assets are and how they should be treated and
recorded.

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Debt management
As part of the reforms around risk reporting and debt stock, initiatives should consider how
such reports can incorporate climate-related data. This could be linked to broader initiatives
around making fiscal risk statements public. MoF has already started to model disaster-
related fiscal risk for incorporation into the MEFF document.
Revenue
Revenue policy (and its subsequent implementation through revenue administration) needs
to reflect overall policy aspirations32 to minimise Green House Gas (GHG) emissions33 and
provide some incentivisation to that end. In addition, some consideration needs to be given
on how to levy taxes on polluters and to assess the impact various revenue policies have on
CC mitigation and adaptation issues and on aspirations relating to the achievement of GHG
targets.
Practical measures supporting this will include establishing a structured and systematic
approach to assessing and prioritising compliance risk from climate-related taxes and
maintaining comprehensive information on GHG emitters. There also needs to be a
compliance improvement plan and a system to assess the effectiveness of penalties for non-
compliance.
There also needs to be a review to enable the formulation of a carbon tax policy, together
with plans of how legislative changes might be made to launch carbon taxation.
Longer-term measures, probably outside of the timeframe of this policy, might be the
provision of social transfers and reductions in the basic rate of income taxes may help offset
the burdens of a carbon tax for low and middle-income households.
There also needs to be the development of a framework to allow the assessment of new
revenue measures against climate related criteria.
Legislative scrutiny
Support to parliamentarians and parliamentary secretariats needs to include capacity
building on how to assess budgetary proposals and budgetary outturns to ensure that they
comply with Ethiopia’s climate-related policy framework and that they are climate smart.
Reporting, Transparency, and accountability
Initiatives need to be put in place to communicate the progress of climate-related budgeting
reform in the public domain. This will help inform the relevant stakeholders about the
government’s actions and support more active engagement of citizens, civil society, and
elected representatives.
BUILDING FINANCIAL MANAGEMENT LITERACY ACROSS GOVERNMENT
A set of PFM training modules should be designed for senior management of PBs and
parliamentarians on finance committees, including new appointees. These should be
mandatory. (Strategy Plan P.VIII.4.1.1, P.VIII.4.1.2)

32
As set out in the CRGE.
33
The 10-year plan targets to increase greenhouse gas emissions reduction capacity from the present 92.7
million metric tons of carbon dioxide equivalent (CO2E) to 162.3 million metric tons of carbon dioxide equivalent,
among other CC-related targets.

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These modules can be rolled out to key actors outside PBs in due course – civil society,
media, and parliamentarians. (Strategy Plan P.VIII.4.1.3)
ENHANCED FISCAL FEDERALISM
The following are areas where the federal government has a role in supporting individual
regions with the roll-out of their PFM strategies:

• Support to improving the overall PFM performance of regional government through:

o IFMIS roll-out across all regional Bureaux of Finance and regional PBs
(Strategy Plan P.VIII.5.1.1);
o Peer-to-peer support improving the quality of accounting, reporting, and
integration with other PFM functions, internal audit, procurement, budgeting
(including programme budgeting), asset and investment management
woredanet infrastructure and data centre management. (Strategy Plan
P.VIII.5.1.3); and
o Enhanced PFM reform governance by including SNGs at the (Federal)
Technical Steering Committee (Strategy Plan P.VIII.5.1.2).

• Support to enhanced revenue generation and revenue administration capacity of

SNGs through:
o Peer-to-peer support from MoR to development of the capacity of Regional
Bureaux of Revenue in revenue administration and accounting. (Strategy Plan
P.VIII.5.3.1)

• Strengthening the accountability institutions of SNGs through:

o Assisting with the development of Offices of Federal Auditors General
(ORAGs) in the region through peer-to-peer support (Strategy Plan P.5.2.2)
and through the maintenance of mechanisms by which learning can be shared
and mentoring support provided by OFAG to ORAGs, e.g., consultative fora
for Auditors General (Strategy Plan P.5.2.1);
o Building the capacity of Regional Ethics and Anticorruption Commissions in
corruption prevention and detection through support and mentoring given by
the Federal Ethics and Anticorruption Commission (FEACC) (Strategy Plan
P.VIII.5.2.3);
o Providing support to Regional Councils (and in particular PACs and Budget
and Finance Standing Committees) through support from OFAG and MoF
(Strategy Plan P.VIII.5.2.4).
Federal Government will also coordinate support to conflict-affected regions to restore PFM
capability. (Strategy Plan P.VIII.5.1.4)
For all these interventions, FDRE will be a champion of the Regions with development
partners, seeking funding support for PFM reform across jurisdictions.
MANGING REFORM
EMRD needs to be reviewed for staffing and consideration needs to be given to supporting it
with both additional capacity building and technical assistance. This will help to ensure that
reform is properly co-ordinated and sequenced, that key stakeholders are managed and
supported, and the steering committee properly informed of progress, constraints and actions
needed. (Strategy Plan P.VIII 6.1)

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7. Opportunities and constraints

Since the formulation of the last PFM Strategy, the government has shifted fundamentally in
policy direction. Whilst PFM was always seen as an important part of the policy and reform
framework, aspects of PFM are now cited, front and centre, as important aspects of
delivering the home-grown economic reform that is an essential part of the government’s
growth agenda. This presents a massive opportunity and should ensure that this strategy
receives support from the highest levels of government, an essential facet of any reform’s
success. It is, therefore, critical that the leadership of the institutions most relevant to the
delivery of this strategy play their part in keeping the PFM reform agenda on the agenda.
There is an important aspect of the policy change that needs to be harnessed, too. The
government has now explicitly welcomed the idea of piloting reforms, something which
under previous administrations was not embraced. This presents opportunities and gives
reform leaders some leeway in determining how reform might be delivered. For example,
with the training of PB senior management or with the roll-out of the professionalisation
agenda, different approaches might be piloted in different PBs to determine which
approaches work best before a more comprehensive roll-out.
Another significant change in policy direction is the intention to better involve civil society
in accountability. This presents a huge opportunity, allowing authorities to build on some
advances already made but involving a wider constituency of stakeholders. In light of this, a
rapid stock-take of civil society and its capacity to engage with aspects of financial
accountability, which should, inter alia, identify where there may be opportunities for
engagement. This is reflected in the strategy matrix.
The dynamics within parliament have also undergone a change. In particular, Parliamentary
Standing Committees are now more vigorous and engaged. This presents an opportunity,
both in terms of strengthening parliamentary oversight but also finding a well-placed
champion of PFM reform.
A particular feature of the current reform architecture is that it is dominated by some ‘big
ticket’ reforms, in particular, the roll-out of IFMIS, IPSAS and e-GP. These reforms will bring
many benefits, including those associated with timely and integrated in-year and annual
reporting, asset accounting, and functional integration. However, there are also risks in
relying on these reforms.
Whilst IFMIS has been rolled out across the vast majority of PBs at the federal government
level, two challenges remain – 1) the roll-out to regions, which will affect the ability of the
government to produce fully consolidated national accounts; and 2) institutionalising the use
of the system (e.g., in-year reporting, use of commitments). Meanwhile, IPSAS will
thoroughly modernise how the government accounts for its resources, but it is a complex
reform that needs high-level domestic political support and support from development
partners and will take years to fully roll-out. And finally, e-GP, in line with any platform roll-
out, is complex. Should any of these endeavours run into difficulties, there will be far-
reaching implications for the successful delivery of key aspects of this strategy.
The implementation of the strategy will be severely constrained if it is not possible to secure
adequate resourcing. Internally the government faces challenges presented by recovering
from the COVID-19 pandemic, inflation caused by the global downturn and the war in
Ukraine, and by the costs of security operations to address internal instabilities, particularly in
the North. Meanwhile, some of these pressures also affect donors. It will be important to
consider different scenarios and prioritise activities carefully in annual planning processes. It
will also be important to roll out reform as cost-effectively as possible.

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8. Risk and mitigation strategies

There are a number of risks facing the implementation of the PFM strategy.
Risk Potential Impact Mitigation
Ongoing conflict and • Budget reliability tested Seek early conflict resolution
instability within Ethiopia as demands of managing
crises results in fiscal Support conflict-affected
stress regions to restore their PFM
• Domestic resources system
used for reform get
diverted
• Ongoing conflict has an
impact on assistance
flows (e.g., IMF debt
relief)

Climate Change and other • Significant budget Conducti comprehensive

non-climate disaster risks adjustment, significant fiscal risk assessments
variance between budget including those risks from
and outturns at climate change and other
aggregate and natural disasters; and
composition level allocating resources to deal
• Affects budget reliability with disasters proactively
and available fiscal without significantly affecting
space the annual budgets.
Global economic downturn Scarcity of funds for reform Advocate for PFM reform as
reduces fiscal space for both being a means of ensuring
government and DPs more efficient and effective
resource allocation
Change in policy direction of Downscaling of the Leaders in PFM reform to
government; abandonment importance of PFM in the continue to advocate for
of ten-year plan government’s list of priorities ‘Ethiopia 2030: The pathway
to Prosperity’ and, more
broadly, the centrality of
PFM reform as delivering
growth under any policy
framework
Fluctuating political Past successes in PFM Seek high-level
Commitment reform in Ethiopia have been endorsement for PFM reform
secured through political across the Federal
commitment at the highest government
levels. Without these Ensure accountabilities of
initiatives – particularly PFM reform governance
involving cross-government structures (e.g., PFM
cooperation, legislative Reform Steering Committee)
backing, revision and to the top of government
allocation of resources, will (PM’s Office).
falter. Ensure proper follow-up of
M&E

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High staff turnover, poor Lack of key personnel to Address the

retention, and inability to deliver complex reforms; professionalisation agenda
recruit qualified personnel in reform effort falters. of strategy and look to target
key areas key professional groups as
part of the broader civil
service reform agenda
Ensure flexibility of pay
scales to aid with targeting
key professional groups
Link professionalisation and
training to career
development and ensure
robust induction schemes for
entrants
PFM reform is not properly Stagnation of reform, The identification of clear
coordinated and managed duplication of effort governance structures for
PFM reform, including
steering committees,
thematic groups, and M&E
processes to properly
manage and track reform,
coupled with fully
harmonised donor
coordination mechanisms
Competing priorities mean Stagnation of reform as Build MoF’s capacity to lead
that PFM Reform Strategy is some key PBs (including the reform process and
not given due prominence MoR, OFAG, MoPD but also EMCD’s capacity to
amongst some of the key key line ministries) address coordinate reform and
PBs other priorities and reforms. support Steering Committee
so that it can take
meaningful action.
Consider measures to
incentivise reform, e.g., by
high-profile naming of top
performers. Enlist the
support of the PMO and
Parliament
Ensure early cross-PB
ownership of strategy by
early cross-government
validation
Cumbersome procurement Lack of capacity in Ensure procurement training
processes delay the developing TORs, bid of key personnel where and
progress of reform documents, weak tender and if relevant; ensure robust
contract management for M&E of Strategy
goods and services needed Implementation to provide
by the PFM Reform Strategy early warning of bottlenecks
will contribute to and constraints.
implementation delay
Delay in necessary Key revisions or newly Ensure support and
legislative drafting, revision, drafted legislation might awareness of key potential
and promulgation will linger at Cabinet or not be champions (top of
hamper the progress and promptly debated and government, Ministers,
effectiveness of PFM reform passed by Parliament. parliamentarians)

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Annex I: 2019 PEFA Assessment Summary

Scoring Dimension ratings Overall
PFM PI
method i ii iii iv rating
Pillar I. Budget reliability
PI-1 Aggregate expenditure outturn M1 A A
PI-2 Expenditure composition outturn M1 D C A D+
PI-3 Revenue outturn M2 C D D+
Pillar II. Transparency of public finances
PI-4 Budget classification M1 B B
PI-5 Budget documentation M1 C C
PI-6 Central government operations outside financial reports M2 B C B B
PI-7 Transfers to subnational governments M2 A A A
PI-8 Performance information for service delivery M2 A D A A B+
PI-9 Public access to fiscal information M1 D D
Pillar III. Management of assets and liabilities
PI-10 Fiscal risk reporting M2 D D D D
PI-11 Public investment management M2 D C D C D+
PI-12 Public asset management M2 C D C D+
PI-13 Debt management M2 B A A A
Pillar IV. Policy-based fiscal strategy and budgeting
PI-14 Macroeconomic and fiscal forecasting M2 B A C B
PI-15 Fiscal strategy M2 D D NA D
PI-16 Medium-term perspective in expenditure budgeting M2 D D D* B D+
PI-17 Budget preparation process M2 A B C B
PI-18 Legislative scrutiny of budgets M1 B A A B B+
Pillar V. Predictability and control in budget execution
PI-19 Revenue administration M2 B C A D* C+
PI-20 Accounting for revenue M1 C B C C+
PI-21 Predictability of in-year resource allocation M2 C B B C C+
PI-22 Expenditure arrears M1 A C C+
PI-23 Payroll controls M1 B A B C C+
PI-24 Procurement M2 D A D D D+
PI-25 Internal controls on non-salary expenditure M2 A C B B
PI-26 Internal audit M1 A C C D D+
Pillar VI. Accounting and reporting
PI-27 Financial data integrity M2 B NA C B B
PI-28 In-year budget reports M1 D D NA D
PI-29 Annual financial reports M1 C B C C+

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Annex II: Strategic Plan

Pillar I: Budget reliability

Responsible
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
P.I.1. Expenditure Variances
P.I.1.1.1 Review the regulatory
framework governing budgetary
Review report. Revision to
compliance (to include comparing
MoF regulatory framework. x
with good practice from other
Improved compliance.
jurisdictions) to improve enforcement
of budgetary rules.
P.I.1.1.2 Capacity building plan –
and then roll-out - for planning and
budgeting officers across PBs, with MoF, MoPD Capacity building reports x x x x x
P.I.1.1 Expenditure particular emphasis on the
outturns show minimal complexities of capital budgeting.
variances, in accordance
P.I.1.1.3 Draft and put in place
with good international
mechanisms to review the readiness Review mechanisms
practice MoPD
of capital projects to be included in drafted and rolled out x x x x x
Directorate
the budget process (Cross-reference
to Pillar III)
P.I.1.1.4 Build capacity to enhance
MoPD PIM
the role of the PIM Directorate in Capacity building reports x
Directorate
overseeing capital budget proposals
P.I.1.1.5 PFM literacy training across
senior management in PBs. (Cross- MoF Capacity building reports x x x x
reference to Pillar VIII)
P.I.2. Revenue outturn variances
P.I.2.1. Revenue outturns P.I.2.1.1 Issues relating to poor
show minimal variances revenue and tax enforcement need MoR, MoF Periodic agency reports x x x x x
against budget, in to be addressed in consultation with

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Responsible
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
accordance with good donors already engaged in this area
international practice . Cross-reference to Pillar V
P.I.2.1.2 Capacity support to the
Capacity Building Report
MoR and the Fiscal Policy
MoR / Fiscal which includes joint
Directorate in the construction of
Policy projection tools, models, x
robust revenue projections, thereby
Directorate and procedures to enhance
reducing propensity of variance
reliability of estimates
against estimates
P.I.2.1.3 Capacity support to
revenue budgeting across PBs (for Capacity building initiative
MoF x x
non-tax revenue) – Cross reference reports
to Pillar V

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Pillar II: Transparency of Public Finances

Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.II.1. Production of Budget information and accountability
P.II.1.1.1 Revise budget guidelines to
incorporate all the elements currently Revised guidelines x
missing in budget documentation
Budget
P.II.1.1.2 Capacity support to Budget Directorate,
Directorate, Tax Policy Directorate (for Tax Policy
Tax Expenditure reports) and Fiscal Directorate,
Policy Directorate/Debt Directorate MoF Training/support given x x
(Summary information of fiscal risks),
P.II.1.1. Budget Government Accounts (previous year
Documentation presented budget execution reports in the same
to the legislature is format as budget estimates)
inclusive of all information
as determined by good
international practice P.II.1.1.3 Submission of all budget
documents (as required by good Budget Reports submitted in
x x x x
international practice and PEFA PI-5) Directorate budget package
to parliament

P.II.1.1.4 Technical assistance to

Budget, Finance and Planning Budget
Standing Committee members and Directorate, Training given x x
secretariat staff on the draft budget Parliament
review

P.II.1.2.1 Conduct review of current

P.II.1.2. Public has documents published and those
access to all elements of required by good practice (as set out Budget Review, assignment of
information as prescribed by PEFA PI-9, including budget Directorate, responsibility document x
by good international proposals, enacted budgets, execution MoF (and possibly circular)
practice (e.g. PEFA) reports, audit financial statements, pre
budget statements, external audit

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

reports, summaries of budget
proposals and macro forecasts) , and
assign responsibilities for the
production of absent documents

P.II.1.2.2 Produce workplan for the

Workplan x
publication of documents

P.II.1.2.3 Roll-out of workplan Workplan reports x x

P.II.1.2.4 Publication of budget Complete budget

information prescribed by good information publicised on x x x x x
international practice (e.g. PEFA) the website of MoF

P.II.1.3.1 Train staff in the Budget Budget

Training given evidenced
Directorate of MoF on principles Directorate, x
P.II.1.3. Public servants by training reports
underpinning financial accountability MoF
are aware of the need to
produce and disseminate
P.II.1.3.2 Train senior management of Budget
information to key Training given evidenced
PBs on principles of financial Directorate, x x
stakeholder groups by training reports
accountability (rolling programme) MoF
(especially elected
representatives and the
public). P.II.1.3.3 Train high-level finance staff
Ministry of Training given evidenced
across PBs on principles of financial x x
Finance by training reports
accountability (rolling programme)

P.II.1.3. CSOs and media

are also aware of
P.II.1.3.4 Train CSOs and media on
principles of financial Ministry of Training given evidenced
principles of financial accountability x x
accountability and Finance by training reports
(rolling programme)
contribute to the demand
for information
P.II.2. Comprehensiveness of Financial Data

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.II.2.1.1 Review and revise
guidelines (and legislative framework) Revised guidelines.
Reform Unit,
to ensure that revenue and Revised Public Financial
Ministry of x
expenditure from EBUs is captured Administration
P.II.2.1 Published Finance
and that responsibilities and proclamation.
financial information of accountabilities are clear
GoE contains data from
extra-budgetary units,
Reform Unit,
supported by a regulatory P.II.2.1.2 Ensure that IFMIS roll-out
Ministry of Confirmatory report x
framework which ensures includes EBUs
Finance
the inclusiveness of
government’s financial
statements P.II.2.1.3 Completion of IFMIS roll-out,
IFMIS reports,
which includes full assimilation of Reform Unit,
consolidated GoE
EBUs. Production of consolidated Ministry of x x x x x
statements including
financial statements using IFMIS Finance
EBUs
which include EBUs
P.II.3. Comprehensive sector and consolidated service delivery data
P.II.3.1.1 Review the current
regulatory framework to ensure the
Ministry of Revised regulations.
assignment of clear responsibilities for
Finance, Guidelines
the coordination and consolidation of x
P.II.3.1. The routine Ministry of
sector service delivery reporting, with
publication of service Planning
the Ministry of Planning and
delivery data by the Development as the clear focal point
Federal Government,
showing outputs and P.II.3.1.2 Development of a
outcomes achieved standardised format for reporting of Ministry of
through public Standardised reporting
sector service delivery by MoPD. Planning & x x
expenditure for all sectors template
(Consider support from short-term Development
technical assistance if necessary)

P.II.3.1.3 Roll-out of reporting Ministry of Training reports x

template to all sectors and PBs. Planning &

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

Training is given on how to report Development
using the template

P.II.3.1.4 Sector reports produced by Consolidated, cross

Ministry of
each sector and consolidated by government sector
Planning & x
MoPD; a consolidated report delivery report produced
Development
published on the website and published on website

Pillar III: Management of Assets and Liabilities

Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
P.III.1. Monitoring of public corporations
P.III.1.1.1 Draft and put in place a
policy which clarifies which
agencies are responsible for
Policy document
monitoring State-owned enterprises
MoF adopted, oversight x
(in particular defining roles of MoF,
reports
PEHAA [Public Enterprises Holding
P.III.1.1 Annual financial and Administration Agency] and
statements of all public EIH)
corporations are published
within six months of the P.III.1.1.2 Draft and put in place a
end of the fiscal year, and policy as to how MoF consolidates Policy document
a consolidated financial and publicises the financial MoF adopted, financial x
performance is published statements of SOEs, including those statements
by the Government under EIH
annually
P.III.1.1.3 Clarify policies regarding Policy document in
the recognition and accounting place
treatment of some categories of MoF x
financial assets, such as
investments and contingent
liabilities, in line with international

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
standards for all SoEs

P.III.1.1.4 Support to design and

maintenance of Public Corporations,
investment in other companies
(government shares), and MoF Database x x
Contingent liability databases

P.III.1.1.5 Support to the publication

of annual financial statements,
which now include a disclosure Annual Financial
MoF x x x
about Public Corporations and Statements
contingent liabilities, in line with
IPSAS
P.III.1.1.6 Facilitate the publication
Consolidated reports
of a consolidated report on the
MoF of financial x x x
financial performance of the public
performance
corporation annually.
P.III.1.1.7 Facilitation of a public
corporation performance
Workshop /
assessment (including risk MoF
Publication of
assessments) workshop with the PEHAA x x x
Proceedings of the
presence of relevant entities EIH
workshop
including EIH, PEHAA, MoPD and
other stakeholders
P.III.2. Consolidated Financial Statements of SNGs

P.III.2.1 Annual and timely P.III.2.1.1 Revision of the financial Revised reporting
publication of financial reporting guidelines to address the MoF, SNGs x
guidelines
statements of subnational timeliness of preparing and

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
governments (SNGs – the publishing SNG consolidated
Regions) financial statements.

P.III.2.1.2 For the short-term,

produce consolidated statements by
Developed tool,
continuing development of the tool
consolidated
to extract IBEX data, and in the MoF x x
statements produced
longer term, by the comprehensive
from multiple sources
roll-out of IFMIS (within six months
of the end of each financial year)

P.III.2.1.3 In the longer term,

IFMIS roll-out reports
continue the roll-out of IFMIS, in at Federal Level at all
particular, replacing IBEX across PDs
SNG, to enable the production of MoF x x
consolidated using just IFMIS data
(within six months of the end of
each financial year)

P.III.2.1.4 Provide support to SNGs

in the use and roll-out of IFMIS in MoF x x x x x
each region

P.III.3. Reporting of liabilities and risks

P.III.3.1.1 Revision of the reporting

Budget
guideline of the Budget Directorate
Directorate, Revised guideline x
P.III.3.1. Quantified and to include fiscal risk reports as one
MoF
consolidated contingent of its deliverables.
liabilities and fiscal risks of
Government published P.III.3.1.2 Build the capacity of the x
Debt Capacity building
annually Debt Directorate to produce fiscal
reports, study tour
risk reports annually, which includes Directorate, x
MoF reports, resulting
the fiscal risks from SOEs, SNGs,
guidance notes from
EBFs, and Climate change,

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
amongst others, through study tours Debt Directorate
and mentoring, and guidance note
relating to these reports

P.III.3.1.3 Continue capacity- Debt Capacity building

x x x
building initiatives internally Directorate reports

P.III.3.1.4 Develop and promulgate

guidelines on how to incorporate Debt Guideline, revised
x x
climate-related data in debt stick Directorate reporting
reporting
P.III.4. Public Investment Management
P.III.4.1.1 Guidelines governing the
prioritisation of capital budgets to be
developed for PIM. These need to
incorporate issues relating to Capital project
gender and climate. PIM Unit,
prioritisation x
P.III.4.1 Properly MoPD
guidelines
regulated public
investment management,
with the selection of
projects based on rigorous
economic analysis policy
prioritisation and viability x
linked to proper forward P.III.4.1.2 Develop a medium-term
planning, and which also PIM Unit, Public Investment
Public Investment Plan Framework
reflects good climate MoPD Plan Framework
in line with the national strategy.
awareness practice

P.III.4.1.3 Undertake an
independent assessment of the PIM Unit, Capacity
x
capacity of MoPD in discharging its MoPD Assessment Report
PIM responsibility in light of the PIM

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
proclamation.

P.III.4.1.4 Implement capacity

enhancement plan resulting from
assessment. In particular, this
should address production and
publishing pre-feasibility, feasibility, PIM Unit, Capacity building
x x x x
midterm, final, and ex-post project MoPD plan, reports
evaluations need to be made more
effective, perhaps through
experience sharing with other
countries

P.III.4.1.5 Development of project PIM Unit,

Database x
management database MoPD

P.III.4.1.6 Roll-out of initiatives to

raise awareness of PIM issues with
PBs to ensure compliance with the
proclamation, i.e., the need to have
all capital project proposals Training, revised
MoPD x x x x
assessed in a timely manner. A regulation
regulation supporting the
proclamation might also be
developed. (Cross-reference with
Pillar VIII – Professionalisation)

P.III.4.1.7 Build capacity to perform Capacity building

in-depth climate and gender aspects reports. Guidelines
of project proposals and integrate MoPD x x x
them into project evaluation
processes. Integrate good practice

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
into a guideline.

P.III.4.1.8 Revise and roll out

Environmental Impact guidelines to Revised guidelines:
provide guidance on climate change Environmental and
MoPD x x x x
mitigation, adaptation and Climate Impact
vulnerability. (To include SOEs and Guidelines
EBFs)
P.III.5. Public Asset Management

P.III.5.1.1 Assess the need for x

Public Asset Management Unit in Assessment TOR/
the MoF responsible for recording, MoF Framework,
record consolidation, and monitoring Assessment report
of public assets.

P.III.5.1.2 Assess property

management legal framework and
manuals to address limitations in
thresholds, capturing of project Assessment report,
P.III.5.1. Assets are assets, use of IFMIS, and revised manuals,
properly recorded, consolidation reporting. This should MoF revised Property x x
managed, and monitored include climate-responsive asset Administration
management and also asset Proclamation
measurement, recognition, and
disclosure requirements as per
IPSAS

P.III.5.1.3 Develop and roll out a

plan for the valuation of major fixed
Guidelines, plan, roll-
assets (buildings and infrastructure) MoF x x
out reports
across PBs in line with IPSAS
principles

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
P.III.5.1.4 Review qualification
requirements for those accounting MoF Assessment report x
for assets

IFMIS records,
Reports on
reconciled Asset
P.III.5.1.5 Address issues across
register captured in
PBs relating to the recording of
IFMIS (Y 4-5),
assets in IFMIS. The short-term
MoF Disclosure report on x x x x x
priority is to ensure comprehensive
the Annual Financial
records and longer alignment with
Statement of PBs
IPSAS implementation roadmaps.
and MoF about their
assets (in line with
IPSAS – Y5)

P.III.5.1.6 Guidelines drawn up to

clearly define what climate-sensitive Climate Sensitive
MoF x
assets are and how they should be Asset Guidelines
treated and recorded.

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Pillar IV: Policy based Fiscal Strategy and Budgeting

Outcome sought Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.IV.1. Fiscal Policy
P.IV.1.1.1 Continue support to the
production of a fiscal strategy – annual Fiscal Policy Annual fiscal
x x x x X
production of this document needs to be Directorate strategies
institutionalised
P.IV.1.1. The fiscal
P.IV.1.1.2 Continue to develop and
strategy and the budget
publish the Macro Fiscal Sensitivity
are prepared with due
Analysis. A guideline should also be
regard to
developed on the timely preparation and Fiscal Policy Macro Fiscal
x x x x x
government fiscal publication of the various reports of the Directorate Sensitivity Analysis
policies, strategic plans, Fiscal Policy Directorate reports.
and adequate
macroeconomic
and fiscal projections. P.IV.1.1.3 Development of a guideline
for the timely preparation and
publication of the various reports of the Fiscal Policy
Guideline x
Fiscal Policy Directorate. Directorate

P.IV.2. Multi-year focus of budget estimates

P.IV.2.1.1 Perform assessment of Budget

feasibility to produce 3-year estimates to Directorate, Feasibility
be included in the annual budget. x
Ministry of assessment
Finance

P.IV.2.1 The budget has P.IV.2.1.2 (Assuming outcome of above

a medium-term focus activity) – production of a sequenced Budget
Sequenced plan x
plan for the roll-out of multi-year Directorate
approach across all PBs.

P.IV.2.1.3 (Assuming outcome of above Budget Revised legal

x
activity) – revision of legal framework Directorate framework

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Outcome sought Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5

and budget manuals.

P.IV.2.1.4 Roll-out and capacity building

x x x x
to PBs.
P.IV.3. Medium Term Expenditure Ceilings
P.IV.3.1.1 Consultation between MoF
Agreed new
P.IV.3.1. Properly and the HoPR’s Macro Committee to MoF, HoPR x
sequenced approvals so timelines
adjust approval timelines for.
that Budget Circulars are
issued after legislative P.IV.3.1.2 Build capacity of the Budget
Budget
approval of budget Directorate to produce additional
Directorate, x x
ceilings expenditure ceilings for the next two
MoF
years.

P.IV.4. Availability and use of sector strategies

P.IV.4.1.1 Build the capacity of PBs in

sectors where sector strategies are not
MoPD Training reports x x
produced and provide refresher training
to those which do.

P.IV.4.1.2 Collate all Sector Strategies Strategy documents,

P.IV.4.1. Sector MoPD x x x x
and publish them on the website. website
strategies available for all
sectors and published by P.IV.4.1.3 Institutionalise process of
MoPD Training reports,
establishing that budget proposals from guidelines
sectors/PBs are consistent with sector
MoF, MoPD,
strategies through a programme of x
PBs
training for PB planning functions, MoF
and MoPD, and through the
development of guidelines

P.IV.5. Legislative scrutiny of budget process

P.IV.5.1 Legislative P.IV.5.1.1 Feasibility study to investigate MoF, HoPR Feasibility study x
scrutiny of budget revision of Budget Calendar, inter alia,

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Outcome sought Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5

proposals is at least two looking at international experience
months, in line with good
international practice

P.IV.6. Climate Smart Tax Policy Regime

P.IV.6.1.1 Conduct a review of how

MoF Review report x
taxes can be levied on polluters.

P.IV.6.1.2 Conduct an assessment of

what impact various revenue policies
have on CC mitigation and adaptation MoF Assessment report x
issues and on aspirations relating to the
achievement of GHG targets.

P.IV.6.1.3 Develop a framework on how

Assessment
to assess any new revenue policy MoF x x
framework
against climate considerations
P.IV.6.1. A tax policy P.IV.6.1.4 Establish a structured and
which promotes the policy systematic approach to assessing and
priorities of Ethiopia’s prioritising compliance risk from climate-
CRGE related taxes, a compliance MoF Assessment report x x
improvement plan, and a system to
assess the effectiveness of penalties for
non-compliance

MoF, Climate
P.IV.6.1.5 Establish mechanism for Resilient Green
maintaining a register of large GHG Economy Mechanism report x
emitters (CRGE) Facility,
Public Bodies

P.IV.6.1.6 Formulation of Carbon Tax

MoF Policy x x
Policy

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Pillar V: Predictability and control in budget execution

Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.V.1. Revenue management regime which takes account of risk, provides reliable revenue estimates, monitors arrears, and
produces reliable information
Review report which
sets out how targeted
assistance can
P.V.1.1.1 Undertake periodic reviews strengthen risk
of risk management at the Ministry of MoR assessment/ x x x
P.V.1.1 Properly integrated management capacity
risk management Revenue.
incorporated into the revenue Repeated review
management regime. reports for years 3
and 5

P.V.1.1.2 Technical assistance in

Capacity building
response to review and capacity MoR x x x x x
reports
building.

P.V.1.2.1 Undertake a review of

existing legal frameworks relating to
non-tax revenue collections (those
outside the mandate of MoR) and
Review report, revised
issue a regulatory framework to MoF x x
regulatory framework
P.V.1.2. Improved collection ensure that the Treasury Department
and reporting of non-tax is supplied with revenue projections
revenue. and collection information in a timely
manner.

P.V.1.2.2 Targeted capacity building

to PBs who collect revenue on the Capacity building
MoF x x
development of appropriately robust reports
projections.

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.V.1.2.3 Development of a plan to
ensure that all PBs are able to
MoF x
provide monthly reports from year 3
of this strategy.

P.V.1.2.4 Production of monthly

reports across PBs detailing MoF Monthly reports x x x
collections against projections.

P.V.1.3.1. Assessment to review the

current system of tax arrears
MoF, MoR Assessment report x
recording, monitoring, and reporting
practices.

P.V.1.3.2 Development of the

improvement plan to achieve quality
Improvement plan
and reliable arrears recording and MoF, MoR x
approved
reporting, and reconciliation practices
between MoR and MoF

P.V.1.3. Robust tax arrears P.V.1.3.3 Development of a

monitoring, reporting and procedure for publishing key tax
reconciliation, and publication revenue information, including Tax
of key tax revenue Arrears (including ageing), cost- MOR Procedure document x
information benefit analysis of tax expenditure,
tax appeal decisions, and annual
performance reports of MoR.

P.V.1.3.4 Development and roll-out

Capacity building plan
of capacity building plan to facilitate MoF, MoR x x x x
and progress reports
the roll-out of the above procedure.

P.V.1.3.5 Critical review of the quality

of the Taxpayer Database, including
MoR x x x x
development and implementation of
a data clean-up plan

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.V.1.4.1 Form team to review
TADAT and establish which
MoR Review document x
recommendations remain
P.V.1.4. Implementation of all outstanding
TADAT findings P.V.1.4.2 Draft roadmap for the
implementation of remaining TADAT Roadmap document,
MoR x x x
recommendations (Annex III) and progress reports
implement

P.V.1.5.1 Take forward existing UK

P.V.1.5 Tax Expenditure
support to institutionalise the Annual tax
reports produced as a matter MoR x x x x x
production of Tax Expenditure expenditure reports
of course
reports
P.V.2. Predictability of in-year resource allocation

P.V.2.1.1 Roll-out ZBA approach to Weekly, then daily

all PB accounts. This should include cash balances report
ways of ensuring how the Treasury Treasury generation x x x x x
P.V.2.1 Government cash can access all bank accounts,
and bank balances including those outside TSA structure
consolidated as frequently as
possible (with the aim of P.V.2.1.2 Consultation between MoF
doing this on a daily basis and Central Bank of Ethiopia to
within the life of strategy) Cash transfers with
explore ways of accelerating
Treasury increased frequency, x x
transfers of cash collected by MoR
ultimately instantly
from collection bank accounts to the
Treasury Single Account

P.V.2.2.1 Improve budgeting to Improved budgeting

P.V.2.2 Improved budget
reduce in-year budget reallocations evidenced by reduced
reliability and reduction of in- MoF x x x x
(cross-referenced to Pillar 1 number of in-year
year reallocations
activities) reallocations
P.V.3. Payroll Integrity
P.V.3.1 Greater confidence in P.V.3.1.1 Development of an audit OFAG, Standard payroll audit x

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

payroll data with a reduction programme for a comprehensive Inspection programme which can
in payroll ‘ghosts’ and robust payroll audit. Directorate be used across PBs
ongoing payroll controls.
P.V.3.1.2 Implement plan on a rolling OFAG,
Implementation plan,
basis across PBs, so that each entity Inspection x x x x
audit reports
is covered once every two years. Department
P.V.4. Procurement
e-GP fully
P.V.4.1.1 Ensure that there is a
implemented across
robust, fully funded and fully costed
Procurement PBs, ensuring the
roll-out strategy for e-GP to improve x
Authority population of a cross-
monitoring, evaluation, and
government integrated
management of public procurement.
database

Procurement e-GP functional in

P.V.4.1.2 Ensure roll-out of e-GP. x x x x
Authority each PB

P.V.4.1. MAPS P.V.4.1.3Ensure that the plan

recommendations acted resulting from the MAPS review
upon, resulting in an (Summarised in Annex IV), is Procurement Revised legal
x x x x
integrated procurement implemented, monitored by the PFM Authority framework
database across government, Steering Committee and is seen as
functional Procurement part of the overall PFM strategy
Complaints Review Board,
increased professionalisation P.V.4.1.4 Draw up terms of reference
Procurement
for an independent Procurement Terms of Reference x
Authority
Complaints Review Board.

P.V.4.1.5 Establish Procurement Procurement Board

Complaints Review Board and make Procurement minutes, revised
x
an appropriate revision to the Authority Procurement
Procurement Regulations. Regulations

P.V.4.1.6 Seek inclusion of Procurement Professionalisation

procurement officers in moves to x x x x
Authority plans and reports
professionalise public financial

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

management sector – cross-
reference to Pillar 8 (Cross-
Cutting/Professionalisation).

P.V.4.2.1 Develop and roll-out

framework for ensuring greater CSO
P.V.4.2. Enhanced Published framework,
engagement in the procurement Procurement
transparency in public media and CSO x x x
cycle, in particular, the monitoring of Authority
procurement reports
awards and contract implementation
progress.

Training material,
P.V.4.3.1 Develop training and train
Procurement reports, list of ‘green’
procurement staff across PBs on x x x
Authority procurement
sustainable procurement principles.
champions

P.V.4.3.2 Revise procurement

guidelines and standard contracts to
Procurement Revised guidelines,
include ‘green’ issues and x x
Authority contracts
identification of climate-related
P.V.4.3. Procurement which impacts on the procurement process.
reflects good practice
P.V.4.3.3 Conduct a detailed
approach to climate change Procurement
appraisal of climate-related impacts x
issues Authority
of the procurement process.

P.V.4.3.4 Develop and roll-out

Procurement
advanced training on green Training materials x x
Agency
procurement principles to key staff.

P.V.4.3.5 Institutionalise assessment

Contract
of all contracts for climate-related Procurement
assessments, action x x
risks and identify actions, particularly Agency
plans
for high-impact contracts.
P.V.5. Internal controls over non-salary expenditure
P.V.5.1. Effective P.V.5.1.1 Ensure that cash modules MoF Report confirming x

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

commitment controls which and commitment modules of IFMIS appropriate linkages
contribute to fiscal discipline are linked, ensuring that
and the management of commitments can only be raised
arrears when cash is allocated and available.

P.V.5.1.2 Ensure that commitment

modules are rolled out and used by System reports,
MoF x x x x
all PBs. Make any necessary amended regulations
changes to Financial Regulations.
P.V.6. Internal Audit
P.V.6.1.1 Review Internal Audit
function across government to
Review report,
include job grading, retention issues,
MoF implementation of x
etc. and link internal audit to
recommendations
initiatives to professionalise the PFM
sector (cross refer to Pillar VIII).

P.V.6.1.2 Develop and roll out

P.V.6.1. Internal audit MoF, IAUs,
capacity building plan for internal Capacity building
coverage across PBs which is Inspection x x x
audit function, to include application plan, roll-out reports
delivered in accordance with Directorate
of recognised IA standards
international standards, which
provides advice which is Review reports,
acted on by senior P.V.6.1.3 Review and institutionalise MoF, IAUs, necessary changes to
management, and which is management response mechanisms Inspection regulatory frameworks x x
reported on in the public to internal audit reports Directorate
domain

P.V.6.1.4 Awareness training

developed and rolled out to senior
MoF, IAUs, Development of
management across PBs to inculcate
Inspection training modules, roll- x x x
a full understanding of the role of
Directorate out repots
internal audit and its function as a
support to management

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Outcome sought Activities Lead agency Output Indicator Y1 Y2 Y3 Y4 Y5

P.V.6.1.5 Support given to production
of Internal Audit Annual Reports,
IAUs,
containing information about plan vs.
Inspection First annual report x
actual audit performance, coverage,
Directorate
management responses and other
issues.

IAUs,
P.V.6.2.1 Develop Enterprise Risk Inspection Enterprise Risk
x x
Assessment Module. Directorate, Assessment Module
MoF

P.V.6.2. Internal audit IAUs,

coverage of PBs, which P.V.6.2.2 Provide training for Inspection
Training reports x
reflects risk-based audit conducting risk assessments for PBs. Directorate,
methodology MoF

IAUs,
P.V.6.2.3 Produce Internal Audit Inspection
Internal Audit Plans x x x
Plans which reflect risk assessments. Directorate,
MoF

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Pillar VI: Accounting and Reporting

Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
P.VI.1. Production of financial information and financial accountability
P.VI.1.1.1 Build awareness in
PBs for senior management to MoF, PBs Training reports x
monitor advances

P.VI.1.1.2 Review oversight

arrangements of PB advances MoF Review report x
at MoF.

P.VI.1.1.3 Revise financial

regulations to reflect
P.VI.1.1 Advances are cleared MoF Revised regulations x
responsibilities and
promptly and the balance on
accountability mechanisms
advance accounts kept at
reasonable levels P.VI.1.1.4 Provide assistance to
produce a Consolidated Reporting template, first
MoF x
Receivables report which shows report
receivables by age

P.VI.1.1.5 Ensure that IA

functions in each PB review Inspection
advance once a year and that Directorate, IA reports x x x
OFAG covers issues in the Final MoF
Accounts audit.
P.VI.2. In-year reporting
System reports x

P.VI.2.1 Timely in-year reports Capacity building to head

P.VI.2.1.1 Ensure timely roll-out of PBs and Federal level
produced by IFMIS showing
of IFMIS system to replace IBEX MoF cabinmate about
expenditure to date against x
in all PBs. understanding and use of
budget
PFM reports for decision
making purpose

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
Mandatory production and
publication of in-year x x x x
financial statements

P.VI.2.1.2 Perform review of

workload and duties of
MoF, Review reports
Government Accounting Unit
Government
and building the capacity as x
Accounting
needed so that consolidated In
Unit
year reports can be produced
timely

P.VI.2.1.3 Provision of training

on how to use financial reports
MoF Training reports
for decision-making to senior
staff of PBs.
P.VI.3. Completeness of annual financial reports
P.VI.3.1.1 Consider valuation of
and accounting for assets as an
P.VI.3.1 Annual accounts
issue to be considered as part of
include information on tangible MoF System reports x x x x x
IPSAS roll-out – support will be
assets and guarantees
needed across PBs as part of a
multi-year engagement
P.VI.4. Transition to IPSAS
P.VI.4.1.1 Update and validate Revised roadmap,
current IPSAS roadmap; identify MoF technical assistance needs x
P.VI.4.1. IPSAS accounting technical assistance needs assessment
fully rolled out and all financial
statements prepared in P.VI.4.1.2 Secure funding for
accordance with internationally IPSAS roll out. MoF Project agreements x
recognised standards
P.VI.4.1.3 Capacity Building MoF Reports x x x x
(Training on IPSAS), the roll-out

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Lead
Outcome sought Activities Output Indicator Y1 Y2 Y3 Y4 Y5
Agency
of roadmap

P.VI.5: Revision of Chart of Accounts

P.VI.5.1.1. Conduct gap

P.VI.5.1 Revising the chart of
assessment of the existing chart
accounts ensure compliance
of accounts against the GFSM
with GFSM 2014 for improved
2014, IMF technical note on MoF Assessment Report x
Government Statistics,
chart of accounts, IPSAS,
adoption of IPSAS, better PBB
Programme based budget
reporting
reporting and IPSAS

P.VI.5.1.2: Revision of the Chart

of Account based on the MoF Revised Chart of Accounts x
assessment findings

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Pillar VII: External scrutiny and audit

Outcome sought Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5
P.VII.1. External Audit
P.VII.1.1.1 Accelerate putting in PAC, the Audit New Audit Board in place
place a new Audit Board to ensure x
P.VII.1.1 Complete Board – Board minutes
oversight of OFAG
autonomy, including
financial independence, P.VII.1.1.2 Review options for
secured for Supreme determining budget ceiling for Options paper, Audit
Audit Institution (OFAG). OFAG, including percentage Audit Board Board minutes adopting x
appropriation model, separate preferred option
appropriation, etc.

P.VII.1.2.1 Development of a
guidance note for all PBs about
OFAG Guidance Note x
how and when to respond to Audit
Reports.
P.VII.1.2 Audit reports and
recommendations P.VII.1.2.2 Review of legislation
responded to in a timely and regulations to ensure good OFAG, MoF,
Revised legislation x
manner by all PBs across practice and reflection of the above HoPR
the government. guidance note

P.VII.1.2.3 Reinvigorate roll-out of

audit recommendations tracking OFAG Tracking system in place x x
system

P.VII.2. External Scrutiny

P.VII.2.1. A fully P.VII.2.1.1 Review capacity of

capacitated Public PAC, with a view to producing
Accounts Committee capacity building plan for HoPR Review of capacity x
which is able to use the committee members and
work of OFAG to hold it parliamentary secretariat
and the executive to Capacity building plan
account. P.VII.2.1.2 Roll-out of a capacity HoPR x x x
building plan, to include the review reports

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Outcome sought Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5

of climate-related expenditure and
gender issues

P.VII.2.2.1 Review of capacity

needs of OFAG, bearing in mind
challenges resulting from IFMIS PFAG Review report x
implementation, IPSAS, climate
and gender
P.VII.2.2. OFAG keeps
abreast of reforms and P.VII.2.2.2 Ongoing capacity
developments across the assistance reflecting capacity Capacity building reports
government, enabling it to needs assessment, with particular OFAG x x x x
remain relevant in its emphasis on building OFAG’s
advice and oversight capacity to undertake IT audit

P.VII.2.2.3 Training of OFAG staff

to enable audit of Gender Training materials, training
OFAG x x
Responsive Budgeting and climate reports
related issues

P.VII.2.3 Parliament has

capacity to review draft P.VII.2.3.1 Training given to
legislation to ensure that parliamentarians in reviewing
good PFM practice is legislation ensure that good PFM Training material and
reflected and impact on HoPR x
practice is reflected and impact on reports
existing laws and policies existing laws and policies is
is assessed. assessed.

P.VII.3. Accountability and the media, CSOs

P.VII.3.1 Media sector and
NGOs are aware of the P.VII.3.1.1 Programme of training Training reports
work of OFAG, and play a and awareness raising for media OFAG x
role in enhancing and CSOs
accountability

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Pillar VIII: Cross-cutting Issues

Outcome
Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5
sought
P.VIII.1. Gender Budgeting
P.VIII.1.1
Gender-related
MoF, Ministry of
expenditure P.VIII.1.1.1 Review of Gender Policy
Women and Review documentation x
linked to a Framework to map all policies in place
Social Affairs
robust policy
framework

P.VIII.1.1.2 Review of GRB budgeting MoF, Ministry of

Revised guidelines,
guidelines to ensure linkages to the strategic Women and x
review report
framework Social Affairs

MoF. Ministry of
Gender PEFA
P.VIII.1.1.3 Conduct a Gender PEFA Women and x
assessment report
Social Affairs
P.VIII.2. Professionalisation
P.VIII.2.1 Government minutes,
Professional P.VIII.2.1.1 Continue to advocate for memoranda, directives
standards professionalisation with PMO; ensure AABE x
agreement of Professionalisation strategy Professionalisation
applied across strategy
the PFM sector
in Ethiopia
which guide
both technical P.VIII.2.1.2 Promulgation of Professionalisation
practice and AABE, PBs Strategy reports x x x x
Strategy
ethical
standards
P.VIII.3. Climate Responsive PFM
P.VIII.3.1 P.VIII.3.1.1 Establish and capacitate Climate Revised MoF structure,
MoF x x x
Budgets fully Budget Department in Budget Directorate, MoF. capacity building plans

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Outcome
Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5
sought
reflect CRGE and reports
and other P.VIII.3.1.2 An in-depth review of existing
climate-related Climate Budget
budgeting practices to better identify current
policies of the Department, Review report x
gaps and weaknesses.
government MoF

P.VIII.3.1.3 The development of assessment

frameworks which should be applied to
Climate Budget
determine the extent to which any budget
Department, Assessment frameworks x
proposals meet the government’s climate-
MoF
related policies (as well as the relevant sectoral
policies).

P.VIII.3.1.4 Steps to integrate climate change

considerations into the budget circular. This will
Climate Budget
provide guidance to PBs as to how to integrate Revision to budget
Department, x x
climate change into planning and budgeting circular guidance
MoF
processes, including the incorporation of
climate-related fiscal risks.

P.VIII.3.1.5 Conduct Climate-related Public MoF, CRGE Public Expenditure

x x
Expenditure Review PBs Reviews

P.VIII.3.1.6 review upcoming Disaster Risk

Financing Strategy to ensure that all
recommendations around strengthening PFM MoF Review document x
practices to make them more climate-smart are
incorporated in mainstream reform plans

P.VIII.4. Building Financial Management Literacy across government

P.VIII.4.1 P.VIII.4.1.1 A set of PFM training modules

Greater PFM designed for senior management of PBs and
MoF Module design x
compliance parliamentarians on finance committees,
grounded in the including new appointees.

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Outcome
Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5
sought
high level of
PFM
awareness P.VIII.4.1.2 Roll-out of training to leaders in PBs
x x x x
across PB and key stakeholders
leadership and
other key P.VIII.4.1.3 Conduct assessment of the
stakeholders potential for CSO and media engagement in
MoF Assessment report x
PFM and conducting consultative workshop
based on the findings.

P.VIII.4.1.4 Roll out of training to Civil society,

x x x
media, and parliamentarians
P.VIII.5. Enhancing Fiscal Federalism
P.VIII.5.1.1 Support to Annual reports showing
MoF- IFMIS
IFMIS implementation progress of IFMIS x x x x
Directorate
across SNGs implementation.
P.VIII.5.1.2 Inclusion of
Steering committee
SNGs on PFM Technical MoF x x x x x
minutes
Steering Committee
P.VIII.5.1.3 Assisting
regions with reform
implementation to improve Memoranda of
P.VIII.5.1 Improved overall PFM the quality of accounting, understanding between
performance of SNGs through reporting, and integration federal government and
MoF- relevant
support to core functions and roll- with other PFM functions, SNGs.
departments as
out of IFMIS internal audit, procurement, Joint action plan to be x x x x x
applicable
budgeting (including developed with KPIs
FPPPA
programme budgeting),
asset and investment Annual progress reports
management woredanet against KPIs
infrastructure and data
centre management
P.VIII.5.1.4 Supporting Damage assessment
conflict-affected regions to MoF reports x x x x x
restore their PFM system Action plan detailing

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Outcome
Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5
sought
federal government
support
Implementation reports
P.VIII.5.1.5 Support to
regions to report to Federal
Government on the use of
funds allocated for climate Report on climate
MoF x x x
Expenditure (This requires related expenditure
supporting of SNGs to be
able to tag climate related
expenditure)

P.VIII.5.2.1 Conducting
consultative fora with the Meeting minutes and
OFAG x x x x x
Regional Office of Auditors communiques
General (ORAGs)
P.VIII.5.2.2 ORAG Capacity
Building training/peer-to- OFAG Training reports x x x x x
peer support from OFAG
P.VIII.5.2.3 Mentoring and
P.VIII.5.2. Strengthened peer-to-peer capacity
accountability institutions of SNGs building support to REACCs FEACC Training reports x x x
in corruption prevention and
detection
P.VIII.5.2.4 Building the
capacity of regional councils
(specifically the regional
OFAG /MoF Training reports x x x
PACs and Budget and
finance standing
committees)
P.VIII.5.3. Enhanced revenue P.VIII.5.3.1 Capacity
Training reports
generation and revenue Building Support to regional MoR x x x
administration capacity of SNGs Bureaux of Revenue
P.VIII.6 Managing Reform
P.VIII.6.1: Strengthening the P.VIII 6.1.1 Capacity MoF Capacity Assessment x

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Outcome
Activities Lead Agency Output Indicator Y1 Y2 Y3 Y4 Y5
sought
capacity of EMRD Assessment of the EMRD report

P.VIII.6.1.2 Capacity
Staffing and Training
Building Support to EMRD MoF x
reports
(staffing and training)
P.VIII.6.1.3 Technical
assistance support to MoF TA progress reports x x x x
EMRD

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Annex III:Summary of TADAT Performance Assessment

INDICATOR Score 2016 SUMMARY EXPLANATION OF ASSESSMENT

POA 1: Integrity of the Registered Taxpayer Base
P1-1. Accurate and reliable Reliability of the taxpayer registration database is
taxpayer information . low as a result of the uncertainty as to the number
of active taxpayers and poor design of the tax
D administration system (SIGTAS) and lack of
procedures for maintaining the tax register.

P1-2. Knowledge of the potential ERCA does not routinely undertake actions nor
taxpayer base. D routinely use third party data to identify
unregistered entities.

POA 2: Effective Risk Management

P2-3. Identification, assessment, ERCA does not conduct research to identify
ranking, and quantification of D compliance risks. Further, a structured risk
compliance risks. assessment process is yet to be implemented.

P2-4. Mitigation of risks through D ERCA does not have a compliance

a compliance improvement plan. improvement plan.
P2-5. Monitoring and evaluation of The impact of risk mitigation activities on
compliance risk mitigation D taxpayer compliance behavior is neither
activities. monitored nor evaluated.

P2-6. Identification, assessment, A enterprise risk management framework was

and mitigation of institutional D developed in 2012 but has not yet been
risks. implemented.

POA 3: Supporting Voluntary Compliance

P3-7. Scope, currency, and There is a wide range of information available to
accessibility of information. taxpayers at a minimal cost. However, It is not
C available at convenient times nor is it always
current.

P3-8. Scope of initiatives to A presumptive tax regime (turnover tax) is in

reduce taxpayer compliance place to provide simplified record keeping and
costs. reporting arrangements for small taxpayers.
Common misunderstandings by taxpayers are
analyzed and published as FAQs (frequently asked
C questions). Tax forms are outdated, and the e-filing
system is currently limited to taxpayers only (not
authorized agents).

P3-9. Obtaining taxpayer ERCA uses a variety of methods to elicit regular

feedback on products and B feedback from taxpayers, but taxpayer input is not
services. taken into account in the design of new

administrative processes and products when

they are first introduced.
POA 4: Timely Filing of Tax Declarations

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INDICATOR Score 2016 SUMMARY EXPLANATION OF ASSESSMENT

Overall, the data provided to rate this indicator
(Attachment III, Tables 4 – 8) are inconsistent and
D unreliable, and therefore determined to unusable
to rate this indicator.

P4-11. Use of electronic filing Electronic filing is currently in place for all core
facilities. taxes but restricted to the large taxpayer branch
and some of the medium taxpayer branches.
D Moreover, because e-filing is not mandatory,
taxpayers can alternate between e-filing and
manual filing.

POA 5: Timely Payment of Taxes

P5-12. Use of electronic D There are no facilities for taxpayers to pay
payment methods. taxes electronically.

P5-13. Use of efficient Although there is some withholding at source

collection systems. for certain taxes, there are no advance
D payment arrangements for income taxes.
arrangements.

P5-14. Timeliness of payments. A large percentage of value added tax (VAT)

payments is reported to be made on time (88 and
95 percent by number and value respectively –
Attachment III – Table 10) but this performance
statistic needs to be qualified owing to: (i) an
unreliable taxpayer registration database (POA 1);
(ii) generally unreliable information on filing (POA
4); (iii) the uncertainty regarding the timeliness of
payments related to returns filed electronically in the
absence of matching electronic
D payments facilities; and (iv) delays in processing
returns and other liabilities. Therefore the data
cannot be used to rate this indicator.

P5-15. Stock and flow of tax Although the level of tax arrears appears to be
arrears. low (between 12–15 percent – Attachment III,
D Table 11), the assessment team determines that
the data is unreliable given the existence of a large
number of taxpayers liable to

personal income tax (PIT) that do not have tax

accounts associated to their Taxpayer Identification
Number (TINs); the inaccuracy of taxpayer account
balances resulting from delays in posting of
liabilities; and SIGTAS specification related
inaccuracies in calculating interest and penalties for
delayed payments. The data therefore cannot be
used to rate this indicator.

POA 6: Accurate Reporting in Declarations

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INDICATOR Score 2016 SUMMARY EXPLANATION OF ASSESSMENT

P6-16. Scope of verification The audit program covers all core taxes and
actions taken to detect and most key taxpayer segments, but selection of
deter inaccurate reporting. cases for audit is decentralized. There is no
D+ automated crosschecking of third-party
information against taxpayer returns.

P6-17. Extent of proactive There is no system for public and private

initiatives to encourage D rulings although nonbinding opinions are
accurate reporting. issued to guide taxpayers.

P6-18. Monitoring the extent of D There is no monitoring of the extent of

inaccurate reporting. inaccurate reporting for any core tax.

POA 7: Effective Tax Dispute Resolution

P7-19. Existence of an A tiered review mechanism is in place and is used,
independent, workable, and but there are no documented administrative
graduated dispute resolution procedures to support the review process.
process. Furthermore, the administrative and appeal stages
D+ are not fully independent, and complete details
about the tiered dispute process are not
published.

P7-20. Time taken to resolve Data is not kept on the time taken to
disputes. D determine disputes.

P7-21. Degree to which dispute Dispute outcomes are not acted upon.
outcomes are acted upon. D

POA 8: Efficient Revenue Management

P8-22. Contribution to Involvement in revenue forecasting is minimal.
government tax revenue D
forecasting process.

P8-23. Adequacy of the tax The system does not align with tax laws and
revenue accounting system. government accounting standards with much of the
D revenue monitoring and reporting done manually.

P8-24. Adequacy of tax refund The VAT refund system is inadequate. It is

processing manual, not risk-based, requires a separate refund
claim by taxpayers, and does not pay interest due
D to taxpayers for delayed refunds. Accurate data on
time taken to process refunds is not available.

POA 9: Accountability and Transparency

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INDICATOR Score 2016 SUMMARY EXPLANATION OF ASSESSMENT

P9-25. Internal assurance An independent Internal Audit and Ethics and
mechanisms. Liaison Directorates exist but neither has sufficient
staff with skills appropriate for the functions. Not all
key procedures and internal controls are
documented and the audit programs do not cover
all key operations. The Ethics and Liaison
Directorate (ELD) has appropriate investigative
C+ powers, oversees the formulation of integrity
strategies, and maintains integrity statistics, but
these are not publicly reported.

P9-26. External oversight of the Independent external oversight of the ERCA is

tax administration. undertaken by several agencies and taxpayers can
ultimately seek redress through an external
Ombudsman.
C
P9-27. Public perception of Perception surveys are conducted annually,
integrity. but the results are not published, used to
improve ERCA’s governance framework, or
C monitored each year against past
performance.

P9-28. Publication of activities, D ERCA does not publicize its activities, results or
results, and plans. plans.

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Annex IV: Summary of MAPS Recommendation

Recommended

No. Recommended Action Responsibility Timeline

Pillar I L egal, Regulatory and Policy Framework

1 Revise the PPL considering the recommendations MoF – Federal ST

provided in the Matrix.
When preparing the new Procurement
Proclamation (i) identify discrepancies, overlaps, BoF – Regions
and repetitions within the procurement legal and MT
regulatory framework and address them in the
revised legislation.

2 Ensure integrity and consistency of the law: MoF – Federal

Reg
BoF – Regions

a. Identify and address discrepancies, overlaps, and

repetitions between the procurement legal and MoF – Federal
ST-LT
regulatory framework and other laws. Some BoF – Regions
examples are identified in the Matrix.

b. Add a function to the Regulatory Bodies to

screen all procurement laws, circulars, letters,
and similar advisory documents, from all MoF – Federal
ST
sources, for their consistency. Public Bodies BoF – Regions
should be mandated to submit such documents
to the Regulatory Bodies.

c. Ensure such screening is carried out regularly. MoF – Federal

Reg
BoF – Regions

3 Ensure consistency of the secondary public MoF – Federal

procurement legislation and other level legislation ST
with the requirement of the PPL30. BoF –Regions

4 Develop appropriate legislation for SOEs’

FPPA jointly with the
procurement based on analytical study to identify
regional regulatory ST
the need and objective of regulating their
bodies
procurement.

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No. Recommended Action Responsibility Timeline

5 Establish a single, central, and easily accessible

repository for all directives, circulars, letters, and
similar advisory documents to be kept up to date
and complete.
Regulatory bodies
- Improve coverage and functionality of the PPA ST
and MoF/BoF
website and maintain its contents up to date.
- Regions should establish their own website
and until then consider using the federal
PPA’s website for the short term.

6
Agree on harmonized SBDs for the federal and
regional levels, update the SBDs, and publish on Regulatory bodies ST - MT
the website Maintain it up to date.

7
Develop a policy for promotion of sustainable MoF/BoF MT
procurement.

8 Engage procurement stakeholders to create

Regulatory bodies MT
awareness on sustainable procurement.

9 In the Regions, issue PPP directives in accordance

with their PPL or preferably separate PPP BoF - Regions MT
proclamation with a directive.

Pillar II Institutional Framework and Management Capacity

10 Adopt and implement a law to ensure proper

project planning, administration, and NPDC
management. House of the People’s
Representatives ST
At the federal level such law is currently in the
process and it needs to be championed for Regions
approval.

11 Improve performance on payment:

- Review the processes for payment of invoices to
identify and remove bottlenecks.
- And streamline budget transfer process from
federal to regions PBs
ST + Reg
- Ensure consistency between finance and MoF/BoF
procurement documents on payment
procedures.
- Consider publishing payment procedures on
websites for easy access to the bidding
community and the public

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No. Recommended Action Responsibility Timeline

12 Review the organizational structure of the

regulatory bodies to identify improvements to
allow the regulatory bodies to focus on and
MoF/BoF MT
properly discharge their key responsibilities.
Provide adequate staffing as per the approved
positions.

13 Establish regulatory function with adequate

structure and resource, independently from BoF
BoF - Regions MT – LT
particularly in the big regions like Oromia and
Addis Ababa City Administration.

14 Procurement of common goods (FA):

a. Improve performance of PPDS and provide

adequate staffing to PPDS as recommended in Federal + Regions MT
the Matrix.

b. Expand line items for framework agreement to

harness the benefit from FA. SNNPR and Afar

15
Consider revising the primary legislation in the
Regions to include the centralized procurement BoF MT
arrangement (pool system) used in Woredas and
Zones.

16 Implement e-GP:

a. Pilot at the federal level31. PPA Immediate

b. Prepare a roadmap for the roll out at the

PPA ST
federal level.

c. Prepare Roadmap for development and

Federal PPA and BoF ST
implementation in the Regions

18 Improve system for collecting and use of

Regulatory bodies MT
procurement data.

a. Establish a procurement policy team that

utilizes the procurement data to make Regulatory bodies ST
procurement policy recommendation.

b. Consider integrating the existing KPI system

with e-GP to ensure consolidated data Regulatory bodies MT
collection, analytics, and reporting

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No. Recommended Action Responsibility Timeline

c. Issue annual reports publicly on the performance of the Regulatory bodies Reg
procurement system including trend analysis.

19 Training:

a. Update the procurement professionalization

training strategy document and the roadmap
to reflect current developments and lessons PPA ST
and address the challenges to establish skill
based sustainable training program.

b. Consider establishing permanent training

programs of suitable quality in regions or agree Regions Regulatory
ST
with the federal PPA to access training bodies
programs offered at federal level

20 Establish competence-based professional

development and procurement profession based PPA and CSC MT
on the technical and behavioral competencies.

21 Develop performance evaluation system specific

to public procurement and link with incentives CSC MT
and promotion.

Pillar III Public Procurement Operations and Market Practices

22 Introduce a requirement in the legislation to carry

out need analysis, followed by the market MoF - Federal ST
research

23 Develop tools and guidance on procurement

performance such as on market research, ST-MT
procurement methods and evaluation of bids, PPA - Federal
Reg
sustainable procurement (see the Matrix) and
introduce training on the new tools.

24 Carry out dedicated review of record keeping to PPA - Federal ST+Reg

get it improved

25 Establish a system of monitoring and evaluating PPA - Federal Reg

contract implementation

26 Establish and carry our regular assessment of risks

PPA - Federal Reg
associated with the identified key sectors

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No. Recommended Action Responsibility Timeline

27 Consider adding to the menu of procurement

tools such as rejection of abnormally low bids,
multistage procurement methods, life cycle cost
MoF - Federal ST+MT
evaluation criteria, sustainability criteria and
contract management features such as
arbitration.

28 Streamline the process for advertising bids in

newspaper in collaboration with the Press Agency.
Regulatory bodies ST
Consider establishing email communication and
wire transfer for payment of services charges.

29 Carry out dialogue with the private sector and

remove constraints inhibiting access of private PPA Reg
sector to the public procurement market.

Pillar IV Accountability, Integrity and Transparency of the Public Procurement System

30 Develop and maintain an online, interactively

searchable database, updated regularly and
accessible to the general public that will provide
PPA MT
data in open format. Once e-GP system becomes
operational, such database should be created
through e-GP system.

31 Introduce in the legislation and establish and

maintain a mechanism for CSOs engagement in
the procurement cycle and feedback loops on
procurement performance and to help to make Regulatory bodies ST+MT
public procurement more competitive and fairer,
improving contract performance and securing
results.

32 Procurement review and audit:

a. Review and provide clear definition of audit

and review responsibilities among the
institutions (review and monitoring by the
Regulatory Bodies and audit by OFAG/ORAG)
MoF/BoF MT+LT
to remove duplication and inconsistency in
their mandates. In the interim, the institutions
should agree on how their audit are
differentiated.

b. In agreement with OFAG and ORAG support

improve capacity building to the auditors in
procurement. Ensure that the auditor to audit PPA MT
procurement are hired based on competencies
and skills in procurement.

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No. Recommended Action Responsibility Timeline

c. Establish a formal follow-up procedure for

procurement audits. It is necessary to ensure
enforcement of actions and addressing the
MoF ST
reviews and audit findings by the public bodies
with necessary support from management
level.

33 Consider reestablishing the Federal Complaint

Review Board with structure allowing to avoid MoF MT
conflict of interest and with adequate resources to
carry out its responsibilities in a timely manner.

34 In Oromia and Addis Ababa establish a separate

review body ideally supported by its own
BoF MT
secretariat or consider sharing services from one
appeal body with the federal government.

35 Revise procedural provisions on complaint appeal

to ensure that bidder have the right to review on
the important procurement decisions, provide for
realistic time and procedure to review complaints, MoF ST
publish the decisions of CRB, define the
mechanism to enforce the decision of the
CRB/BoF in the legal documents

36 Establish practical and accessible appeal system

BoF MT
for procurement at local level

37 Ensure consistency of the public procurement

legislation and other laws related to fraud and MoF MT
corruption.

38 Improve availability and access to information

showing evidence that the laws on fraud,
PPA + AG Reg
corruption and other prohibited practices are
being enforced.

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Annex V: Public Finance Management Monitoring, Evaluation

and Learning Framework
This document is included as a separate attachment.

93
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Annex VI: Stakeholders consulted

Name Organisation Position

1 Ato Dawit Shimeles

MoF - Expenditure Management
and Reform Directorate (EMRD) Director
2 Ato Dessu Gebre MoF - EMRD Team Leader
3 W/ro Sosina Beyene MoF - EMRD Team Leader
4 Ato Muluken Asseged MoF - EMRD Team Leader
5 Ato Daniel Haile Ministry of Education Finance Team Leader
6 Ato Mesele Getachew Ministry of Education Finance Team Leader

7 Ato Delil Kedir Ministry of Education Property Management

8 Ato Addisu Tesfaye Ministry of Education Procurement
9 Sebsibie Lema Ministry of Education EMIS & ICT CEO
10 Ato Solomon Ministry of Health Finance Directorate
Budget Control &
11 Ato Simachew Anemut Ministry of Health Monitoring Team Lead
12 Ato Naod Ministry of Health Planning Directorate
13 Ato Alemayehu Bekele Ethiopian Road Authority (ERA) M&E Team Lead
14 Mamaru Tesfa Ethiopian Road Authority (ERA) Internal Audit
Goods Procurement &
Facility Management
15 W/ro Aster Mamo Ethiopian Road Authority (ERA) Directorate
Planning and Budget
16 Ato Endale Ethiopian Road Authority (ERA) Team Lead
Payment and Payroll
17 Ato Hailu Ethiopian Road Authority (ERA) Team lead
W/ro Neteru
18 Wendwessen MoF - Treasury Director
19 W/ro Emebet Aklilu MoF - Treasury Revenue Team Leader
20 Ato Yohannis Hailu MoF - Debt Directorate Director
21 Ato Dawit Birhanu MoF - Budget Directorate Budget Team Lead
Public Enterprise Senior
22 Ato Henok Zewdu MoF - Public Enterprise Expert
Ato Alehegne
23 Mewakgne MoF - Government Accounts Director
24 W/ro Shishay MoF - Government Accounts
25 W/ro Aster MoF - Government Accounts
w/ro Abaynesh MoF - Legality Inspection
26 Teshome Directorate Director
27 Ato Nigussie
28 Ato Mekonnen Geda MoF - IFMIS Deput Director
29 Ato Jenso MoF - Fiscal Policy Directorate Director

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PR and Information
30 Ato Zelalem Abate MoF - Public Relation Directorate Expert

Procurement Project
Public Procurement & Property coordinator and Training
31 Ato Tsegaye Abebe Administration Agency Advisor

Public Procurement & Property Procurement Project

32 Ato Gebeyaw Administration Agency coordinator

Public Procurement & Property Procurement Project

33 Ato Negash Administration Agency coordinator
Procurement and
Contract Administration
W/ro Muludesta Sector Deputy Director
34 Workneh Public Procurement Service General
35 H.E W/ro Arara Mosisa Parliament - PAC Deputy Chairperson
Hon. Dr Eng Seleshi Parliament - Budget and Finance
36 Kore Standing Committee Deputy Chairperson
W/ro Roman Ministry of Revenue - Strategic
37 Alebachew Department Main Team Leader
38 Ato Ashenafi Molla Ministry of Revenue Team Leader
39 Tilahun Banke MoF - Budget Directorate Budget Director
Office of the Federal Auditor Deputy Auditor General
40 Bera Tadesse General (Audit Division)
41 Awoke Yabe OFAG office Head

Ministry of Planning (MoP) -

Public Investment Management
42 Theodros (PIM) Directorate Team Leader
43 Keteme MoP - PIM Team Leader
44 Aselefech MoP - PIM Team Leader
45 Bereket MoP - PIM Director
Senior Financial
46 Meron Tadesse World Bank Management Specialist
Senior Financial
47 Abiy Demissie World Bank Management Specialist
48 Mathias Hoffmann KfW Group Portfolio Manager
(Principal)
49 Fisseha Alazar EU Delegation - Ethiopia Programme Manager -
Governance and Service
Delivery Team
50 Zeleka Paulos UNICEF Ethiopia – Social Policy Social Policy Specialist
51 Enat Shiferaw UN Women Programme Analyst,
National Planning and
Gender Responsive
Budgeting

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Annex VII: Key documents consulted

CABRI. "Capabilities Assessment Report Series No. 3: Institutional and personnel capabilities for
program budgeting and monitoring in Ethiopia." (2021)
CABRI. "Open Budget Survey 2021." (2021)

Federal Public Procurement & Property Administration Agency, Ethiopia. "E-government

Procurement (e-procurement) Strategy of Ethiopia and action Plan." (2018

Government of Ethiopia. "A Homegrown Economic Reform Agenda: A Pathway to Prosperity."

(2020)

Government of Ethiopia. "Proclamation on Government Project Administration and Management."

(2019)

Government of Ethiopia. "Ten Years Perspective Development Plan: A Pathway to Prosperity

(2021 – 2030)." (2020)

Ministry of Finance. "Annual Performance Report of the Expenditure Management and Reform
Directorate." (2022)
Ministry of Finance. "Consolidated PFM laws and regulations" https://www.mofed.gov.et/
Ministry of Finance. "Gender Responsive Manual." (2012)
Ministry of Finance. "Public Financial Management Strategy (2018 -2020)." (2018)
Ministry of Finance. "Tax Expenditure Report for 2018/19 FY." (2020)
Ministry of Planning and Development. "Public Investment Guidelines." (2019)

PEFA Secretariate. "Handbook Volume IV: Using PEFA to support Public Financial Management
Improvement /Piloting Phase-Feedback Appreciated." (2020)

Secretariat, T. A. D. A. T. "Tax Administration Diagnostic Assessment Tool." Filed Guide prepared

by the IMF (2015).

Women, U. N. "Gender Gap Analysis of the Public Finance Management System of Ethiopia."
(2018)
World Bank. "Assessment of the Public Procurement System Volume I and II." (2021)

World Bank. "Public Expenditure and Financial Accountability Assessment: Federal Democratic
Republic of Ethiopia (Federal Government)." (2019).

96
Annex V: Public Finance Management Monitoring, Evaluation
and Learning Framework

Table of Contents
1. Summary of Key Points ................................................................................................. 2
2. Institutional set-up for PFM monitoring and evaluation .................................................. 4
3. Monitoring and reporting system for the PFM Strategy in Ethiopia ................................ 6
4. Monitoring, Evaluation and Learning (MEL) Framework for the PFM Strategy ............. 10
Pillar I: Budget reliability....................................................................................................... 10
Pillar II: Transparency of Public Finances ......................................................................... 12
Pillar III: Management of Assets and Liabilities ............................................................... 15
Pillar IV: Policy-based Fiscal Strategy and Budgeting ................................................... 23
Pillar V: Predictability and control in budget execution ................................................. 27
Pillar VI: Accounting and Reporting ................................................................................... 33
Pillar VII: External scrutiny and audit ................................................................................. 37
Pillar VIII: Cross-cutting Issues ........................................................................................... 39
5. Evaluation of the PFM Strategy ................................................................................... 45
6. ANNEX 1: Instructions for the PFM strategy and Action Plan Monitoring and Reporting
and Proposed Reporting Templates .................................................................................... 48
Proposed Semi-annual Report Template ............................................................................ 55
Proposed Annual Progress Report Template ...................................................................... 56

1
1. Summary of Key Points
The overall objective of the PFM reform strategy is to achieve a better balanced and
sustainable budget with a reduced debt ratio through more robust financial management and
control and audit processes where budget execution is adequately linked to national
development policies.

The main thematic priorities, as outlined in the PFM Strategy document, are summarized as
follows:

Need for fiscal consolidation and

higher revenue, through tax
policy and administrative Prudent macroeconomic
measures, further prioritization framework and fiscal Elimination of arrears and
of public projects, reductions in policy with the objective prevention of their
the borrowing requirements of to decrease the debt/GDP reoccurrence;
state-owned enterprises (SOEs) over the medium term;
and phasing out of implicit
subsidies.

Strengthened commitment Strengthened revenue

control, control of multiyear collection, and
A well-functioning
commitments and pre- compliance, with the
multiyear budget process;
commitments and an enhanced objective to reduce tax
financial control system; evasion and the tax gap;

Auditing operating in line

Increased transparency
with international
Skilled and capable staff; and better accountability
standards for audit
mechanisms; and
supreme institutions;

Efficient public procurement

system aimed at improving the
quality of public spending.

2
Implementation of the PFM Strategy requires a sound monitoring system which will be
designed at the initial stages of the strategy implementation. This design will take into
consideration the following:

• Public Finance Management Reform (PFM) management structure and institutional set-
up: The key elements of this set-up will be established as part of the PFM Action Plan.
(Although the basic structure is there in terms of accountable institutions, there is a need
to review the efficiency of the functioning of the existing PFM management structure in
practice).

• Costing of the PFM Strategy: The Technical Committee will develop estimated costs
(budget) for each identified intervention in consultation with implementing entities. The
Steering Committee will review the approved cost of the strategy for final approval. The
approved strategic plan budget (cost) will be part of the PFM Strategy document and
reflected in the action plans of the responsible entities.
a. The respective lead agency for implementing the interventions, indicated in the
strategic plan and identified in the MEL framework, should propose the budget
required for the performance of the strategic interventions based on experience
and gathering additional information. Cost estimates should be supported by
relevant analysis.
Monitoring and evaluating the cost-effectiveness and efficiency of the strategic
plan is critical; however, implementing this strategic plan can only be done if and
when the cost estimate of every intervention is undertaken. At this point of strategy
development, the costing of the strategy was not possible, mainly as developing
cost estimates specifically for the interventions such as IPSAS implementation,
Public Investment Management, Public Asset Management, and roll out of IFMIS
require extensive data collection and extensive discussion with different
directorates and institutional partners. The costing should be done later by the
Technical Committee as part of annual planning and should be integrated with the
strategic plan and the MEL framework which is an integral part of the Strategic
plan. The establishment of the PFM management structure and institutional set-
up, costing of the PFM strategy, and the establishment of the PFM monitoring and
reporting systems will be integrated into the Annual Plans and appropriately
sequenced. Annual plans should should clearly sequence and cost activities needed to
establish and run PFM MEL and should clearly define interventions that come under
different management structures/functions such as quarterly steering groups, meetings,
reporting, etc.
• PFM monitoring and reporting: Concrete steps and the key elements of the preparation
of the semi-annual and annual reports will need to be defined, including the deadlines for
preparing the reports and the reporting formats and templates to be used. (The steps,
deadlines and reporting templates should be determined in the Instruction for PFM
monitoring and reporting, which should be prepared by the Ministry of Finance (MOF)).
a. To facilitate the presentation of PFM reporting information on the progress of
reforms, there is a need to define the Semi-annual and Annual Progress Report
structure/s in advance to support the coordination of gathering the required
information from ministries, structures and institutions involved in the
implementation of the PFM strategy actions.
b. To ensure timely evaluation(s), which would in turn inform, the further prioritisation
of PFM strategic interventions, the scope and timings of evaluations should be
decided on in advance (semi-annual, annual, bi-annual). Based on the type and
timing of the evaluation, it is recommended to determine the following scope of the
PFM strategy and the Action Plan evaluation:
i. The implementation of Strategy and Action Plan (effectiveness);

3
 ii. The adequacy of the interventions to achieve the desired results and
objectives (relevance);
iii. The adequacy and efficiency of the PFM management structure
(efficiency)
iv. The preparatory works for evaluation should start in early 2023.

PEFA assessment can be used instead of implementing one of the annual PFM Strategy
evaluations, especially given that the PFM Strategy relies on the latest PEFA (2019),
augmented by additional diagnostics and a wide range of consultations undertaken by the
team. Subsequent PEFAs can be undertaken as a way to monitor progress and performance
and could be a substitute for at least one of the annual PFM strategy reviews and reporting.
Given the new strategy is not yet adapted it would be advisable to allow for at least a year or
so to pass in terms of the strategy’s implementation to schedule the next PEFA.
Introduction
Monitoring of the implementation of the strategies should be done by different structures in
Ethiopia, both functional structures and inter-ministerial coordination structures established for
specific strategic areas. However, the primary responsibility for coordination and monitoring
of the reform will be placed with the Ministry of Finance, the Ministry of Revenue, the Ministry
of Planning and Development, the Office of the Federal Auditor General (OFAG), the Public
Procurement and Property Administration Agency (PPPAA) and the Accounting and Auditing
Board of Ethiopia. They will have relevant roles and responsibilities for coordinating
information aggregation and reports under the relevant pillars.

In addition, the Steering Committee will monitor the PFM Strategy, which will act as an
oversight committee responsible for directing and monitoring PFM reform activities with a
support of a Technical Committee, which should be established to catalyse the reform
activities.

Finally, the National Planning Council and National Planning Committee are responsible for,
the overall monitoring of the strategic framework in Ethiopia. As such, the results of all MEL
activities for the PFM strategy will be shared with them and MoF on a regular basis. MoF
already has the experience, and a dedicated directorate overseeing PFM reform activities will
lead the coordination of MEL reporting.

Although the focus of MEL for PFM strategy is equally on all pillars of the strategy, special
attention has to be paid to those areas in PEFA where monitoring was assessed as weak in
the past, including:
• Monitoring of public cooperations;
• Monitoring of subnational government;
• Financial asset monitoring; Nonfinancial asset monitoring;
• Revenue arrears monitoring;
• Expenditure arrears monitoring and Procurement monitoring.

2. Institutional set-up for PFM monitoring and evaluation

Institutional setup for the monitoring and evaluation of the PFM Strategy ordinarily consists of
four levels, starting with the role of the lead institution – the MoF and ending with the political
level:

4
 • The lead institution: the MOF coordinates reporting on the PFM across participating institutions.
Institutional
level

• PFM Reform Technical Committee consists of: The Expenditure Management and Reform
Directorate (EMCD)-chair and Pillar and component leaders (The Technical Committee will propose
Technical persons to be responsible for the different components under each pillar)
Level

• Steering Committee: chaired by the MoF and membership:

• The State Minister of Finance;Minister of Revenue, The Deputy Minister of Education, Minister of
Agriculture, Director General of the Ethiopia Road Administration, Minister of Health, Minister of
National Planning and Development, Civil Service Commissioner;Representatives from the Prime
Policy Level Minister's Office;The Federal Auditor General (OFAG);Governer of the National Bank of Ethiopia
and the Director of the Accounting and Auditing Board of Ethiopia.

• The Policy Seering Committee accountable to the Prime Minster and appointed by the PM is the
main high-level decision-making committee for the strategic planning process in Ethiopia.
Political level

The first level consists of the lead institution, the MOF, which coordinates reporting on the
PFM across participating institutions.
The second level is usually the PFM Reform Technical Committee which consists of the
following:
• The Director of Expenditure Management and Reform Directorate (EMCD)
• Pillar and component leaders:
The Director of EMCD will chair the Technical Committee. The Technical Committee will
propose persons to be responsible for the different components under each pillar.
The third level consists of the Steering Committee1 to be established to ensure the effective
implementation of the reform strategy and to facilitate the coordination of efforts or reporting
and learning. The Minister of Finance will chair Steering Committee. The Committee members
will likely comprise the following participants:

1
The implementation of previous PFM reforms have been overseen by a National PFM Reform Steering
Committee chaired by the State Minister of MoF. The administrative focal point of the reform has been the
Expenditure Management and Control Reform Directorate under the MoF. Beneath this has been a PFM Steering
Committee, comprising the Ministry of Finance and Regional Bureaux. These arrangements should stay,
although the terms of reference of the committees should be revisited, as they should now include: (i) A clear set
of procedures about how M&E information will (re)enforce accountabilities; and
(ii) Board membership in both of these committees, given the broader nature of this strategy, to include the
Ministry of Revenue, the Ministry of Planning and Development, the Office of the Federal Auditor General, the
Federal Ethics and Anti-corruption Commission and possibly other bodies working in accountability. Perhaps two
sub-committees could be formed, one involving the regions and one the broader representation of the various
federal stakeholder bodies.

5
 • The State Minister of Finance (MOF Reform Implementing Directorate-see PFM
strategy pg. 19) ;
• Minister of Revenue
• The Deputy Minister of Education
• Minister of Agriculture
• Director General of the Ethiopia Road Administration
• Minister of Health
• Minister of National Planning and Development
• Civil Service Commissioner;
• Representatives from the Prime Minister's Office2;
• The Federal Auditor General (OFAG);
• Governor of the National Bank of Ethiopia
• and the Director of the Accounting and Auditing Board of Ethiopia.
To provide focal points for reform, PFM Reform Unit will be established across Public
Bodies - starting with the significant sectoral Public Bodies - to facilitate the
implementation, reporting and M&E of reform. These Units where possible can be sub-
units (part of already existing) Finance and Administration units within Public Bodies,
staffed with existing civil servants whose Job Discrpitpions specifically refer to MEAL
tasks of PFM Strategy.
The fourth level is at the Steering Committee level, which is accountable to the Prime Minster
and appointed by the PM, as the main high-level decision-making committee for the strategic
planning process in Ethiopia. The PM will be informed on the overall process of
implementation of PFM reform through reports that the Steering Committee will submit.
A subcommittee to support regions in developing their respective PFM strategy should
be established (or retained, as this was a feature in the last strategy), and a
representative of that committee should attend the meetings of the National Steering
Committee.

3. Monitoring and reporting system for the PFM Strategy in

Ethiopia
To ensure quality and useful monitoring and reporting, it is necessary to establish immediately
upon the adoption of the PFM strategy the following:
• Clear monitoring and reporting process with responsibilities and calendar.
• Templates and tools to be used in monitoring and reporting (including any IT
solutions, if possible, some suggestions are part of the following sections of this
document);
• Consensus on the ways to use monitoring and reporting information in the decision-
making process; and
• The capacity for MEL of both lead and the key participating institutions.

Clear monitoring and reporting process are needed to inform the participants of their
responsibilities and allow them to prepare for any commitments. Established processes should
include the procedures to complete monitoring and reporting (WHAT), the responsible
institutions for completion of procedures (WHO) and the time to complete these procedures
(WHEN/FREQUENCY). The basis for creating this process for the entire duration of the PFM

2
Linking the PFM strategy work with the 10-year plan.

6
strategy is presented in the MEL Matrix and is complementary to the Consolidated Strategy
Matrix.
Templates and tools (drafts/examples of which are also included with this document) are
necessary to structure the communication between institutions and to ensure that the
presentation of information is compatible and easy to consolidate. These templates should be
tested with relevant institutions (selected number of institutions/pilots) to determine if they
produce the required information. Furthermore, these templates should be accompanied by
instructions on how to fill the templates so that all institutions deliver the same message and
apply the same reporting standards. Finally, to guarantee that everyone interprets instructions
in the same way, a briefing is needed almost at the beginning of the strategy implementation,
especially given that many institutions will be involved in the monitoring and reporting process.
To ensure that reporting and performance information is utilised for future policy design, it is
important to structure the information well so that policymakers and the wider public spend as
little time as possible to absorb it. The report structure must therefore be designed to meet the
needs of the end users.
And finally, the capacity of the institutions to produce quality information and consolidate
information is also essential, as it requires skills to produce good reporting, not as that is often
a case reporting information focused on daily, routine actions but rather on analysis of the
achievements. The capacity for PFM MEL should therefore be improved through guidance,
training, and practice/in-house mentoring.
The basic elements of the monitoring system of the PFM Strategy are defined in the Action
Plan, MEL Matrix, and complementary Consolidated Strategy Matrix.
Frequency: As presented in the figure below the implementation of the PFM should be
monitored semi-annual and annually, with a mid-term evaluation (interim) of the strategy.
Figure 1: M&E System of the PFM Strategy

Implementation Progress of Based on reports from the

(semi-annual) implementation of the respective institutions.
activities

Presenting the progress of the

Results Evaluation of strategy implementation and
(annual) Indicators evaluation based on the success
(outcome) indicators.

Overall
Achievement (Mid-
Implementation of the
Term)
Strategy

Key steps of reporting and responsible institutions:

This section sets out possible institutional arrangements for implementation, coordination and
MEL

7
Lead Ministries, Departments and Agencies are responsible for carrying out the activities
and reflecting them in their departmental/institutional work plans, allocating resources to the
relevant activities, implementing them and reporting on the achievements of activities.
The Legislature and Broader Coalitions such as the Parliament, Assemblies, the private
sector and civil society groups are important in achieving some results. Civil society has
both the non-auditing and auditing roles in this process. Under the non-auditing roles, civil
society organizations can play a participatory role in the strategic planning stage and the
budgeting stage of the public financial management process. In the auditing role, civil society
organizations can monitor government expenditure, contract analysis and follow up on the
Auditor General’s reports. In addition to the oversight role which Parliament has in managing
public finance, it also has a duty of accounting to the people, ensuring that executive authority
is called upon to render account, e.g. through the public accounts committee and Auditor
General.
The Technical Committee is responsible for providing technical guidance to strategy
implementation and facilittating of cooperation and the collaboration of various entities. They
are responsible for consolidation of quarterly and annual results, consolidation and review of
strategy annual plans and resource allocations to achieve strategy before submitting them for
approval to the Steering Committee. They should meet regularly at the start of the
implementation and then at least twice a year once the dynamic of strategy implementation
has been decided.
The Steering Committee is the key authority and decision-making body for the PFM Strategy.
They are in charge of providing direction and provision of oversight, and guidance on the
approach to the delivering results. This committee provides the authorisation needed for
achieving reform implementation. The decisions made by the Steering Committee are final
and should be implemented by the relevant PFM stakeholders. The committee should meet
at least twice a year.
Figure 2: Reporting process of implementation of the PFM Strategy

8
To guide the Ministry of Finance in carrying out monitoring/reporting on the implementation of
the PFM Strategy, suggested instructions for Monitoring and Reporting on the Implementation
of the PFM Strategy can be found in Annex 1.

It is also important to highlight the role of oversight institutions, such as Supreme Audit
Institutions (SAI) And Public Accounts Committees (PAC), in monitoring and evaluating the
PFM Strategy. Causal evidence points out that significantly increased support for SAIs could
lead to the improved achievement of objectives relating to external audits, particularly core
public management and anti-corruption objectives. Building the capacity of SAI is crucial as
they lack qualified staff and technical capacity and a general lack of financial resources. To
ensure that government responds to recommendations from SAIs, sufficient political will or
strengthening of the enforcement power on the part of the SAI should be built as a precondition
for the implementation of this strategy. To enhance these enforcement powers lack of demand
on the part of civil society and the media has to be tackled, including a lack of capacity on the
part of SAIs to engage with civil society and the media effectively.

Furthermore, PACs are successful as catalysts for improving policy implementation and
ensuring the availability of government information to parliament. Focusing on governments’
financial activity and accountability rather than evaluating the content of government policies;
having a broad mandate and the freedom to choose what to investigate, including the ability
to investigate past and present government expenses regardless of when they were made;
the power to check whether the government actually undertakes steps to implement the
recommendations of the PAC; and close working relationships with Auditors General are key
factors that can support effective implementation of the PFM, however, that the success of a
PAC again depends on adequate technical support, nonpartisan functioning of the committee,
and media coverage and public involvement.

9
4. Monitoring, Evaluation and Learning (MEL) Framework for the PFM Strategy
The MEL framework below depicts the overall design of the PFM strategy. In addition to improving the implementation and monitoring of the PFM
strategy and strengthening its periodic evaluation, the MEL assigns the relevant competent authority for individual activities, which will avoid
doubts over the responsibility for implementation and will ensure that the coordinating body is not over-burdened with both implementation and
coordinating/ monitoring responsibilities.

It should be noted that in process of developing the Annual Work Plan MELs, which should be coordinated by the Technical Steering Committee,
the Government may wish to select outcome-level targets. Therefore, they may wish to include in the MEL framework for example, under outcome
P.I.1.1, an outcome-level target around maintaining an “A” PEFA score in the aggregate expenditure composition PEFA indicator and improving
to “B” PEFA results under the expenditure composition outturn and revenue outturn dimensions and similar.

Pillar I: Budget reliability

Outcome Lead
Activities Indicator Data source Type Frequency
sought Agency
P.I.1Expenditure Variances
Gap analysis of requirements
to implement the standard.
Revised regulatory framework.

OFAG reports on compliance.

Procedures and manuals on
P.I.1.1 Revised regulatory framework requirements of the new
P.I.1.1.1 Review the
Expenditure and improved compliance with standard.
regulatory framework
outturns show MoF procedures Qualitative Annual Y1
governing budgetary
minimal Legal and regulatory changes Reports on the application of
compliance.
variances, in made to enable implementation the standard (measured on an
accordance with of the new standard annual basis).
good
international Analytical review
practice demonstrating greater
budgetary compliance year-on-
year
P.I.1.1.2 Capacity Needs assessment, a strategic
MoF - Capacity building strategy
building for planning plan, a financing strategy, and a Semi-Annual
EMCD, Financial plan Quantitative
and budgeting officers rollout plan of the existing training Y1-Y5
MoPD Capacity building reports
across PBs, with programs.

10
Outcome Lead
Activities Indicator Data source Type Frequency
sought Agency
particular emphasis on
the complexities of A pool of officers trained in
capital budgeting. planning and budgeting created
and assigned to budget-related
work.

Budget skills strategy drafted,

including a needs assessment,
and prepare an action plan in
consultation with relevant
stakeholders
P.I.1.1.3 Draft and put
Identified and incorporated legal
in place mechanisms
and fiduciary requirements into
to review the
MoPD - capital monitoring and reporting Policies and processes for
readiness of capital Qualitative
PIM processes. capital project monitoring and Annual Y1-Y5
projects to be included Quantitative
Directorate Decreased variance which comes reporting documents
in the budget process
from Capital Expenditure Deficits
(Cross-reference to
funded by borrowing.
Pillar III)
P.I.1.1.4 Build
capacity to enhance Staff capable of assessing the Capital Budget Analysis
MoPD -PIM Quantitative
role of PIM Directorate feasibility and realistic nature of Capacity building reports Annual Y2
Directorate Qualitative
in overseeing capital the budgets and timeframes
budget proposals
P.I.1.1.5 PFM literacy
training across senior
MoF - Funds committed for training of Semi-Annual
management in PBs. Capacity building reports Quantitative
EMCD senior management Y2-Y5
(Cross-reference to
Pillar VIII)
P.I.2 Revenue outturn variances
P.I.2.1 Revenue P.I.2.1.1 Issues Iinstitutional arrangements for
MoR, MoF
outturns show relating to poor forecasting revenue in place.
Specific
minimal revenue and tax Periodic agency reports
directorate: Qualitative Annual Y1-Y5
variances enforcement Scenario/s for government’s Revenue budgets
(MoF:
against budget, addressed, in expenditure and revenue outturn
Budget,
in accordance consultation with factor/s in dependence on

11
 Outcome Lead
Activities Indicator Data source Type Frequency
sought Agency
with good donors already fiscal revenue from natural resources,
international engaged in this area directorate) sources of economic and revenue
practice (including FCDO). volatility, tax policy and
Cross-reference to MoR administrative reforms,
Pillar V (Planning unanticipated macroeconomic
Directorate) developments, and ‘windfall’
incomes (including revenues from
privatization))

MoR / Staff capable of constructing

P.I.2.1.2 Capacity
MoF- robust revenue projections in the Capacity building
support to the MoR Qualitative
and the Fiscal Policy
Fiscal following year reducing Capability assessment
Quantitative
Annual Y2
Policy propensity of variance against Revenue projections
Directorate
Directorate estimates
P.I.2.1.3 Capacity
support to revenue
More realistic non-tax estimates Budget Implementation report
budgeting across PBs MoF - Qualitative
Improve provision of financial Capacity building initiative Annual Y1-Y2
(for non-tax revenue) EMCD Quantitative
details reports
– Cross reference to
Pillar V

Pillar II: Transparency of Public Finances

Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.II. 1 Production of financial information and financial accountability
Budgetary documentation
P.II.1.1 Budget delivered to parliamentarians
Documentation in accordance with guidelines, Budget documentation
P.II.1.1.1 Revise budget
presented to the MoF - which reflects good practice - as presented to
guidelines to incorporate Qualitative
legislature is Budget leads to better decision- Parliamentarians.
all the elements Quantitative Annual Y1
inclusive of all Directorate, making Reports submitted in
currently missing in
information as EMCD Submission of all budget budget package
budget documentation
determined by good documents (as required by
international practice good international practice and
PPEFA PI-5) to parliament

12
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
Budget documentation
P.II.1.1.2- P.II.1.1.4
Capacity building and
Capacity support to
training records
Budget Directorate,
Capabilities surveys
Capacity support to
MoF - PFM information/data over the PFM strategy
Budget, Tax Policy
Budget accessed and utalised by the duration
Directorate and Fiscal
Directorate, executive, the public and the Tax Expenditure
Policy Directorate/Debt Qualitative Annual Y1-Y5
EMCD parliament reports
Directorate, Government
Parliament Summary information
Accounts,
of fiscal risks
Finance and Planning
Previous year budget
Standing Committee
execution reports in
members and
the same format as
secretariat staff
budget estimates
P.II.1.2.1 - P.II.1.2.3 Workplan for the
Conduct review of review, assignment of
P.II.1.2. Public have Produced Workplan and roll
current documents responsibility
access to all EMCD out of Workplan addressing
published, and those document (and
elements of (FTA Unit), the production of all Eight Qualitative Annual
required by good possibly circular)
information as under the elements, including all five Y 1-Y5
practice, and assign Published budget
prescribed by good MoF basic elements, in accordance
responsibilities for information (as
international practice with the specified time frames,
production of absent prescribed by PEFA
available to the public.
documents standards)
P.II.1.3 Public P.II.1.3.1 Train staff in MoF- Training given
Published recent audit reports
servants (are aware Budget Directorate of EMCD, evidenced by training
in user friendly and accessible
of the need to) MoF on principles Budget reports Qualitative Annual Y1
format
produce and underpinning financial Directorate, Capability
Published Budget Booklet
disseminate accountability MoF assessments
information to key Audit strategy and
stakeholder groups P.II.1.3.2 Train senior MoF- guideline
Senior management of PBs
(especially elected management of PBs on EMCD, Training given
aware of need to present
representatives and principles of financial Budget evidenced by training Qualitative Annual Y2-Y3
information to aid
the public). CSOs accountability (rolling Directorate, reports
accountability
and media aware of programme) MoF Capability
principles of financial assessments

13
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
accountability and Proactively released
P.II.1.3.3 Train high- Training given
contribute to demand information of legitimate public
level finance staff across Ministry of evidenced by training
for information interest where consistent with
PBs on principles of Finance reports Qualitative Annual Y3-Y4
the principles of financial
financial accountability EMCD Capability
accountability and related
(rolling programme) assessments
regulations
Training given
P.II.1.3.4 Train CSOs
Media and CSOs capable of evidenced by training
and media on principles Ministry of
utilising and publishing reports
of financial Finance - Qualitative Annual Y4-Y5
research and holding Media reports
accountability (rolling EMCD
executive powers accountable CSO research/policy
programme)
briefs
P.II.2. Comprehensiveness of Financial Data
P.II.2.1 Published Review and revise MoF - Revised guidelines and Guidelines Qualitative Annual Y2
financial information guidelines (and legislative EMCD Revised Public Financial Official gazette
of GoE contains framework) to ensure that (FTA Unit) Administration proclamation in
data from extra- revenue and expenditure place
budgetary units, from EBUs is captured,
supported by a and that responsibilities
regulatory and accountabilities are
framework which clear
ensures the Ensure that IFMIS roll-out MoF-FIMIS, The completed rollout of IFMIS Confirmatory workplan Qualitative Annual Y1
inclusiveness of the includes EBUs EMCD including EBUs and report
Government’s
financial statements Completion of IFMIS roll- MoF- Production of consolidated IFMIS reports, Qualitative Annual Y1-Y5
out which includes full FIMIS, financial statements using consolidated GoE
assimilation of EBUs. EMCD IFMIS, which include EBUs statements

Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.II.3. Comprehensive sector and consolidated service delivery data
P.II.3.1. The routine P.II.3.1.1 Review Ministry of
Revised regulations and Regulatory
publication of service current regulatory Finance, Qualitative Annual Y1
Guidelines developed framework review
delivery data by framework to ensure Ministry of

14
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
Federal Government, the assignment of Planning &
showing outputs and clear responsibilities Development
outcomes achieved for the coordination (MoPD)
through public and consolidation of
expenditure for all sector service
sectors delivery reporting,
with Ministry of
Planning and
Development as the
clear focal point
P.II.3.1.2
Development of
standardised format
for reporting of
Reporting templates
sector service Standardised reporting
MoPD Technical assistance Qualitative Annual Y1-Y2
delivery by MoPD. template developed
reports
(Consider support
from short-term
technical assistance
if necessary)
P.II.3.1.3- P.II.3.1.4
Training reports
Roll-out of reporting
Sector reports produced by Consolidated, cross-
template to all
each sector and consolidated government sector Qualitative
sectors and PBs. MoPD Annual Y2 -Y3
by MoPD; consolidated report delivery report Quantitative
Training given on
published on website Reports accessible
how to report using
on website
template

Pillar III: Management of Assets and Liabilities

Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.III.1. Monitoring of public corporations
P.III.1.1 Annual P.III.1.1.1 Draft and MoF – Policy document adopted, Annual financial
financial statements of put in place a policy Public oversight reports statement
Qualitative Annual Y1
all public corporations which clarifies which Enterprise Clarified roles of MoF, PEHAA Consolidated financial
published within six agencies are Directorate and EIH performance report

15
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
months of the end of responsible for
the fiscal year, and a monitoring State- Ethiopian
consolidated financial owned enterprises Investment
performance is Holding
published by the P.III.1.1.2 Draft and
MoF –
Government annually put in place policy as
Public
to how MoF Policy document adopted, Annual financial
Enterprise
consolidates and oversight reports statement
Directorate Qualitative Annual Y1
publicises the Clarified roles of MoF, PEHAA Consolidated financial
Ethiopian
financial statements and EIH performance report
Investment
of SOEs, including
Holding
those under EIH
P.III.1.1.3 Clarify
policies regarding
the recognition and
accounting treatment
of some categories
MoF – Monitoring reports on
of financial assets, Qualitative
Government Policy document in place both explicit and implicit Annual Y3
such as investments Quantitative
Accounts contingent liabilities
and contingent
liabilities, in line with
international
standards for all
SoEs
P.III.1.1.4 Support
design and
maintenance of
Public Corporations, MoF –
investment in other Public Established and utilised Public Corporation
Quantitative Annual Y3-Y4
companies Enterprise databases investment database
(government shares) Directorate
database, and
Contingent liability
database

16
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
Financial statement includes a
P.III.1.1.5 Support MoF –
disclosure about Public
publication of annual Government Annual Statement Quantitative Annual Y3-Y5
Corporations and contingent
financial statements Accounts
liabilities, in line with IPSAS

17
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
P.III.2. Consolidated Financial Statements of SNGs
P.III.2.1.1 Revision
of the financial
SNGs annual financial
reporting guidelines
MoF – statements to the
to address the
Government government published. Revised reporting Qualitative
timeliness of Annual Y1
Accounts, IFMIS, Decrease in delays in guidelines Quantitative
preparing and
SNGs publishing audited reports of
publishing SNG
regional governments.
consolidated
financial statements.
P.III.2.1.2 For the
short-term, produce
consolidated
statements by
continuing Developed tool, consolidated Tools
P.III.2. 1 Annual and
development of the MoF - IFMIS statements produced from Consolidated Quantitative Annual Y1-Y2
timely publication of
tool to extract IBEX multiple sources statements
financial statements
data, and in the
of subnational
longer term by the
governments (SNGs
comprehensive roll-
– the Regions)
out of IFMIS
Replacing IBEX across SNG,
to enable the production of
consolidated using only
IFMIS data (within six
months of the end of each
P.III.2.1.3 In the IFMIS roll-out reports
financial year)
longer term, at Federal Level at all Qualitative
MoF -IFMIS Number of multiple sources Annual Y1-Y2
continue the roll-out PDs Quantitative
where IFMIS established and
of IFMIS
utilised producing timely,
comprehensive, and reliable
financial statements in line
with international accounting
and reporting standards
P.III.2.1.4 Provide
Sequenced roll out of IFMIS IFMIS roll-out reports Qualitative
support to SNGs in MoF - IFMIS Annual Y 1-Y5
in each region at Regional Level Quantitative
the use and roll-out

18
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
of IFMIS in each
region
P.III.3. Reporting of liabilities and risks
P.III.3.1.1 Revision
MoF-Budget Budget Directorate Guideline
of the reporting
Directorate, includes fiscal risk reports as Revised guideline Qualitative Annual Y1
guideline of the
EMCD one of its deliverables.
Budget Directorate
P.III.3.1.2 Build the
Number of Annual fiscal risk
capacity of the Debt MoF-Debt Training reports Qualitative
reports include the fiscal
Directorate to Directorate, study tours and Quantitative Annual Y2-Y3
P.III.3.1. Quantified risks from SOEs, SNGs,
produce fiscal risk EMCD mentoring reports
and consolidated EBFs, and Climate change,
reports annually
contingent liabilities
Enhanced and sustain the
and fiscal risks of P.III.3.1.3 Continue
MoF-Debt technical capacity of front, Qualitative
Government capacity building Training reports Annual Y3-Y5
Directorate,EMCD middle and back offices of
published annually initiatives internally
the Debt Management Units
P.III.3.1.4 Develop
and promulgate
MoF -Debt Guidelines on climate
guidelines on how to
Directorate, incorporated in debt stick Guideline, Reports Quantitative Annual Y4-Y5
incorporate climate
EMCD reporting
related data in debt
stick reporting

Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.III.4. Public Investment Management
P.III.4.1 Properly Strengthening project
regulated public selection procedures to
P.III.4.1.1 Guidelines
investment MoPD - ensure only affordable, well-
governing the
management, with PIM designed projects with high Capital project prioritisation
prioritisation of Qualitative Annual Y1
selection of projects Directorate, returns enter annual guidelines
capital budgets to be
based on rigorous MoPD development programmes
developed for PIM
economic analysis Guidelines incorporate issues
policy prioritisation relating to gender and climate
and viability linked to P.III.4.1.2 Develop a MoPD - Public Investment
Public Investment Plan
proper forward medium-term Public PIM Management Roadmap Qualitative Annual Y1
Framework
planning Investment Plan Directorate, developed

19
Framework in line
with the national
strategy
P.III.4.1.3 Undertake
independent
assessment of the
capacity of MoPD in MoPD -PIM
Independent assessment Capacity Assessment Qualitative Annual Y1
discharging its PIM Directorate,
responsibility
considering the PIM
proclamation
P.III.4.1.4 Implement
capacity Assessment
enhancement plan recommendations
addressing capacity Number of produced and Capacity building plan,
to produce and MoPD -PIM published pre-feasibility, reports Qualitative
Annual Y2-Y5
publish pre- Directorate, feasibility, midterm, final, and need to be made more Quantitative
feasibility, feasibility, ex-post project evaluations effective, perhaps through
midterm, final, and experience sharing with
ex-post project other countries
evaluations
P.III.4.1.5
Development of MoPD -PIM Project management
Database Quantitively Annual Y2
project management Directorate, database
database
P.III.4.1.6 Roll-out of All capital project proposals
initiatives to raise assessed in a timely manner.
awareness of PIM A regulation supporting the
issues with PBs to MoPD proclamation might also be Training, revised regulation Quantitative Annual Y2-Y5
ensure compliance developed. (Cross-reference
with the with Pillar VIII –
Proclamation Professionalisation)
P.III.4.1.7 Build
An expert pool of climate and
capacity to perform
MoPD, gender carrying out gender
in-depth climate and Capacity building reports.
MoF- and climate assessments and Qualitative Annual Y3-Y5
gender assessments Guidelines
EMCD integrating gender and climate
of project proposals
lens in project evaluation
and integrate into

20
 project evaluation processes and guidelines
process. available
Gender Impact Assessments
Revised and rolled out
Environmental Impact
assessment guidelines
EI guidelines to also provide
P.III.4.1.8 Revise
MoF – guidance on climate change
and roll out Qalitative and
Climate mitigation, adaptation and Assessment report Annual Y2-Y5
Environmental Quantitative
Unit, climate vulnerability. (To
Impact (EI)
include SOEs and EBFs)
P.III.5. Public Asset Management
P.III.5.1.1 Evaluate
need for Public Asset
Management Unit in MoF – Arrangements for accounting,
the MoF responsible Governme reporting, and monitoring of Annual Y1
Assessment report Qualitative
for recording, record nt investments, and public
consolidation, and Accounts assets identified
monitoring of public
assets.
Limitations in thresholds,
P.III.5.1.2 Assess
capturing of project assets,
property MoF - Assessment report, revised
use of IFMIS, and Qualitative Annual Y1- Y2
management EMCD manuals
P.III.5.1 Assets are consolidation reporting
manuals.
properly recorded, addressed
managed, and P.III.5.1.3 Roll out Plan for the valuation of major
monitored plan for the valuation fixed assets (buildings and Guidelines, Action Plan
MoF, PBs Qualitative Annual Y4-Y5
of major fixed assets infrastructure) across PBs in and report
( line with IPSAS principles
Reviewed and amended
qualification requirements
P.III.5.1.4 Review Include in manuals climate-
MoF –
qualification responsive asset
Governme
requirements for management and also asset Assessment report Qualitative Annual Y1
nt
those accounting for measurement, recognition and
Accounts
assets disclosure requirements as
per IPSAS

21
 Develop and roll out plan for
the valuation of major fixed
assets (buildings and
infrastructure) across PBs in IFMIS records
line with IPSAS principles Reports on reconciled
P.III.5.1.5 Address Asset register captured in
issues across PBs Comprehensive records, and IFMIS (yr 4-5), Disclosure Qualitative
relating to recording
MoF-IFMIS
longer alignment with IPSAS report on the Annual
Annual Y1-Y5
Quantitative
of assets in IFMIS. implementation roadmaps Financial Statement of PBs
and MoF about their assets
Drawn guidelines clearly (in line with IPSAS – Y5)
define climate sensitive assets
and how to treat and record
them.
Guidelines drawn up
to clearly define what
climate sensitive MOF –
Climate Sensitive Asset
assets are and how Climate Adopted Guidelines Qualitative Annual Y2
Guidelines
they should be Unit
treated and
recorded.

22
Pillar IV: Policy-based Fiscal Strategy and Budgeting

Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.IV.1. Fiscal Policy
P.IV.1.1.1 Continue
MoF - Fiscal Qualitative
support to
Policy Annual fiscal documents Annual fiscal strategies Quantitative Annual Y1-Y5
production of a
Directorate
fiscal strategy –
P.IV.1.1.2 Continue
P.IV.1.1. The fiscal A guideline on the timely
to develop and
strategy and the MoF - Fiscal preparation and publication
publish the Macro Macro Fiscal Sensitivity Qualitative
budget are prepared Policy of the various reports of the Annual Y1-5
Fiscal Sensitivity Analysis Quantitative
with due regard to Directorate Fiscal Policy Directorate
Analysis.
government fiscal reports.
policies, strategic
P.IV.1.1.3
plans, and adequate
Development of a
macroeconomic
guideline for the Guidelines with standards for
and fiscal projections. MoF - Fiscal
timely preparation preparation and publication
Policy Guideline Qualitative Annual Y1
and publication of of reports by Fiscal Policy
Directorate
the various reports Directorate developed
of the Fiscal Policy
Directorate.
Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.IV.2. Multi-year focus of budget estimates
P.IV.2.1.1 - Potential for producing 3-
Budget
P.IV.2.1.2 Perform year estimates assessed
P.IV.2.1. The budget Directorate,
assessment of with a sequenced plan for Feasibility assessment
has a medium-term Ministry of Qualitative Annual Y1
feasibility to the roll-out of multi-year Sequenced plan
focus Finance;
produce 3-year approach across all PBs
MoPD
estimates to be proposed

23
 included in the
annual budget.
P.IV.2.1.3 Revision
of legal framework MoF -
Legal framework and budget Relevant legal
and budget Budget
manual revised based on framework Qualitative Annual Y2
manuals (assuming Directorate,
feasibility assessment results Budget manual
outcome of EMCD
P.IV.2.1.1)
P.IV.2.1.4 Roll-out MoF-EMCD, Increased capacity building
Training reports Qualitative
and capacity Budget and the number of trainings Annual Y2-Y5
Quantitative
building to PBs Directorate in PBs
Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.IV.3 Medium Term Expenditure Ceilings
P.V.3.1.1
Consultation
between MoF and
MoF, Macro
the Macro Agreed new timelines Consultation reports Qualitative Annual Y2
Committee
P.V.3.1 Properly Committee to
sequenced approvals, adjust approval
so that Budget timelines for.
Circulars are issued P.V.3.1.2 Build
after legislative capacity of the
approval of budget Budget Directorate
Budget
ceilings to produce Capacity for production of 3- Qualitative
Directorate, Training reports Annual Y2-3
additional year expenditure ceilings Quantitative
MoF
expenditure
ceilings for the next
two years.
Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.IV.4. Availability and use of sector strategies
P.IV.4.1.1.1 –
P.IV.4.1 Sector P.IV.4.1.2 Build Training reports
Strategies produced
strategies available for capacity of PBs in MoPD, MoF- Sector strategies Qualitative Annual Y1-Y5
All Sector Strategies collated
all sectors and sectors where EMCD Strategy documents, Quantitative
and published on website
published by MoPD sector strategies website
are not produced,

24
 and provide
refresher training to
those which do
P.V.4.1.1.3
Institutionalise
process of
Process institutionalised
establishing budget
through training for PBs Training reports
proposals from MoF, MoPD, Qualitative
planning functions, MoF and Guidelines Annual Y2
sectors/PBs PBs Quantitative
MoPD, and development of
consistent with
guidelines
sector strategies

Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.IV.5. Legislative scrutiny of budget process
P.IV.5.1.1
P.IV.5.1 Legislative Feasibility study to
scrutiny of budget investigate revision
proposals is at least of Budget Legislative scrutiny of
MoF, HoPR Feasibility study Qualitative Annual Y4
two months, in line Calendar, inter alia budgets
with good international looking at
practice international
experience
P.IV.6. Climate Smart Tax Policy Regime
P.IV.6.1.1 Conduct MoF – Tax
review on how Policy
Review report Review Qualitative Annual Y3
taxes can be levied Directorate,
on polluters. Climate Unit
P.IV.6.1.2 Conduct
P.IV.6.1. A tax policy
an assessment of
which promotes the
impact various
policy priorities of MoF –
revenue policies
Ethiopia’s CRGE Climate Unit Qualitative
have on CC Assessment report Assessment Annual Y2
/ Tax Policy Quantitative
mitigation and
Directorate
adaptation issues
and on aspirations
relating to the

25
achievement of
GHG targets.
P.IV.6.1.3 Develop
MoF –
framework on how
Climate Unit
to assess any new
/ Tax Policy Assessment framework Assessment Qualitative Annual Y2-Y3
revenue policy
Directorate
against climate
considerations
Develop framework on
assessing new revenue
policy against climate
considerations
P.IV.6.1.4 Establish
Compliance improvement
a structured and Assessment report
plan and a system to assess
systematic Assessment framework
the effectiveness of penalties
approach to MoF – Review of the new
for non-compliance Quantitative
assessing and Climate unit, policies Annual Y2-Y3
Qualitative
prioritising CRGE PBs Review of possibility of
Assessment of the impact of
compliance risk tax levy on polluters
various revenue policies on
from climate related
CC mitigation, adaptation
taxes
issues and on achievement
of GHG targets
Established mechanism for
maintaining register of large
GHG emitters
P.IV.6.1.5
Establish
MoF-
mechanism for Register of large GHG
Climate unit Mechanism report Quantative Annual Y3
maintaining register emitters
CRGE PBs
of large GHG
emitters
MoF –
P.IV.6.1.6 Climate
Progress reports
Formulation of unit, Tax Policy Draft in place
Policy
Qualitative Annual Y3-Y4
Carbon Tax Policy Policy
Directorate

26
Pillar V: Predictability and control in budget execution
Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.V.1. Revenue management regime which takes account of risk, provides reliable revenue estimates, monitors arrears and produces reliable
information
Review report which sets out Bi-annual -
P.V.1.1.1 Undertake
how targeted assistance can Risk management Repeated
periodic review of risk
P.V.1.1 Properly MoR strengthen risk assessment review at Ministry of review reports
management at the Qualitative
integrated risk /management capacity Revenue for years 3 and
Ministry of Revenue
management 5- Y1-Y3-Y5
integrated into Risk management
P.V.1.1.2 Technical
revenue review at Ministry of
assistance in Systematic approach to risk Qualitative
management regime MoR Revenue Annual y1-y5
response to the management established Quantitative
Technical assistance
review
reports
P.V.1.2.1 Undertake
review of existing
legal frameworks
Treasury Department is
relating non-tax
supplied with revenue Review report, revised
revenue collections
MoF projections and collection regulatory framework Qualitative Annual y1-y2
(those outside the
information in a timely
mandate of MoR)
manner
and amend
P.V.1.2 Improved regulatory framework
collection and as per findings
reporting of non-tax P.V.1.2.2 Targeted
Developed appropriately Capacity building
revenue capacity building to
MoF robust projections by PBs reports Quantitative Annual y2-y3
PBs who collect
who collect revenue. PBs projections
revenue
P.V.1.2.3
Development of a Road map/development plan
plan to ensure that all design to ensure PBs
MoF Development plan Qualitative Annual y2
PBs can provide equipped to provide monthly
monthly reports from reports from year 3
year 3 of this strategy

27
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
Monthly
P.V.1.2.4 Production Monthly reports detailing
Qualitative Semi-annual
of monthly reports MoF collections against Monthly reports
Quantitative Y3-Y5
across PBs projections
P.V.1.3.1
Assessment to
Identified areas for
review current
approvement in recoding,
system of tax arrears MoF, MoR Assessment report Qualitative Annual Y1
monitoring, and reporting
recording,
practices for tax arrears
monitoring, and
reporting practices
P.V.1.3.2
Development of
improvement plan to
achieve quality and
reliable arrears Improvement plan
MoF, MoR Improvement plan approved Qualitative Annual Y1
recording and
reporting, and
P.V.1.3. Robust tax reconciliation
arrears monitoring, practices between
reporting and MoR and MoF
reconciliation Key tax revenue information
P.V.1.3.3 includes Tax Arrears
Development of a (including ageing), cost-
Qualitative
procedure to MOR benefit analysis of tax Procedure document Annual Y1
Quantitative
publishing key tax expenditure, tax appeal
revenue information decisions, and annual
performance reports of MoR
P.V.1.3.4
Development and
roll-out of capacity Implemented capacity Capacity building plan Qualitative
MoR Annually Y2-Y5
building plan to building plan and progress reports Quantitative
facilitate roll-out of
above procedure
P.V.1.3.5 Critical Developed and implemented Review Qualitative
MoR Annual Y2-Y5
review of the quality data clean-up plan Development plan Quantitative

28
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
of the Taxpayer
Database
F P.V.1.4.1 orm team Roadmap for the
P.V.1.4Implementati Review document
to review TADAT and implementation of remaining
on of all TADAT MoR Roadmap document, Qualitative Annual Y1
identify outstanding TADAT recommendations
findings progress reports
recommendations drafted and implement
P.V.1.5 Tax
P.V.1.5.1 Take
Expenditure reports Annual reports
forward existing UK
produced as a Annual tax expenditure Programme support
support to
matter of course MoR reports produced in line with reports Quantitative Annual Y1-Y5
institutionalise
international practices Produced Tax
production of Tax
expenditure reports
Expenditure reports
P.V.2. Predictability of in-year resource allocation
Government cash and
P.V.2.1.1 Roll-out MoF- Treasury has access to all
P.V.2.1 Government bank balance reports
ZBA approach to all Treasury bank accounts including Qualitative Annual Y1-Y5
cash and bank Daily/weekly cash
PB accounts. Directorate those outside TSA structure
balances balances
consolidated as P.V.2.1.2
frequently as Consultation between
possible (with the MoF and Central
aim of doing this on Bank of Ethiopia to
MoF-
a daily basis within explore ways of Cash transfers with
Treasury Consultation reports
life of strategy) accelerating transfers increased frequency, Qualitative Annual Y1-Y2
Directorate
of cash collected by ultimately instantly
MoR from collection
bank accounts to the
Treasury Single
Account
P.V.2.2.1 Improve
P.V.2.2 Improved budgeting to reduce Improved budgeting
budget reliability and in-year budget evidenced by reduced Qualitative
MoF, PBs Budget reports Annual Y2-Y5
reduction of in-year reallocations (cross- number of in-year Quantitative
reallocations referenced to Pillar 1 reallocations
activities)
P.V.3. Payroll Integrity

29
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
Standing payroll audit
P.V.3.1.1
programme which can be
Development of audit OFAG,
used across PBs Implementation plan,
programme for a Inspection Quantatative Annual Y1
audit reports
P.V.3.1 Greater comprehensive Directorate
confidence in payroll payroll audit.
data with reduction
P.V.3.1.2 Implement
in payroll ‘ghosts’
plan on a rolling
and robust ongoing BI-
basis across PBs, so OFAG,
payroll controls Annual/Annual
that each entity is Inspection Implementation plan Audit reports Quantitative
Y2-Y5
covered once every Directorate
two years.

P.V.4. Procurement
P.V.4.1.1 - P.V.4.1.2
Ensure that there is a
P.V.4.1. MAPS robust, fully funded
e-GP fully implemented and
recommendations and fully costed
functional across PBs, Fully costed rollout
acted upon, resulting strategy and the Qualitative
FPPPPAA ensuring the population of a strategy for e-GP Annual Y1-Y5
in integrated rollout for e-GP to Quantitative
cross-government integrated Implementation reports
procurement improve monitoring,
database
database across evaluation, and
government, management of
functional public procurement
Procurement Inconsistencies in legal
P.V.4.1.3 Review
Complaints Review framework resolved for
progress of
Board, increased international procurements
implementing MAPS FPPPAA Revised legal framework Qualitative Annual Y2
professionalisation MAPS review implementation
report
and M&E report
recommendations,

30
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
P.V.4.1.4- P.V.4.1.5
Draw up terms of
reference for an
Terms of Reference
independent
Procurement Board
Procurement Establish Procurement
FPPPAA minutes, revised Qualitative Annual Y2-Y3
Complaints Review Complaints Review Board
Procurement
Board and make
Regulations
appropriate revision
to Procurement
Regulations
P.V.4.1.6 Seek
inclusion of
procurement officers
in moves to
professionalise public
Professionalisation plans
financial FPPPAA Reports Qualitative Annual Y2-Y5
developed
management sector
– cross-reference to
Pillar 8 (Cross-
Cutting/Professionali
sation)
P.V.4.2.1 Develop
and roll-out
framework for
P.V.4.2. Enhanced ensuring greater
transparency in CSO engagement in Enhanced involvement of
Published framework,
public procurement the procurement FPPPAA CSOs in the procurement Qualitative Annual Y3-Y5
media and CSO reports
cycle, in particular cycle
the monitoring of
awards and contract
implementation
progress
P.V.4.3. P.V.4.3.1 - P.V.4.3.4 Procurement guidelines and Procurement guidelines
Procurement Develop training and standard contracts include Training modules Qualitative
FPPPAA Annual Y1-Y4
practice reflect good train procurement ‘green’ issues and Training evaluation Quantitative
practice approach to staff across PBs on identification of climate Capability Assessments

31
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
climate change ‘green’ procurement related impacts on the
issues principles procurement process
Developed and rolled-out
advanced training on green
procurement principles to key
staff
P.V.4.3.5 Climate appraisals
Institutionalise Impact assessments of
assessment of all procurement processes
Detailed appraisal of climate
contracts for climate- Climate related risk
FPPPAA related impacts of Qualitative Annual Y4-Y5
related risks and analysis
procurement process
identify actions, Terms of
particularly for high reference/contract
impact contracts assessments
P.V.5. Internal controls over non-salary expenditure
P.V.5.1.1 Ensure that System in place enables
P.V.5.1. Effective cash modules and commitments to be raised Report confirming Annual Y1
MoF - IFMIS Qualitative
commitment controls commitment modules only when cash is allocated appropriate linkages
which contribute to of IFMIS are linked and available
fiscal discipline and P.V.5.1.2 Ensure that
Utilised commitment modules
the management of commitment modules System reports Qualitative
MoF - IFMIS Amended Financial Annual Y2-Y5
arrears are rolled out and Quantitative
Regulations
used by all PBs.
P.V.6. Internal
Audit
P.V.6.1.1 Review
P.V.6.1. Internal
Internal Audit Internal audit linked to Review report
audit coverage
function across initiatives to professionalise Report on Qualitative
across PBs which is MoF Annual Y1
government to PFM sector (cross refer to implementation of Quantitative
delivered in
include job grading, Pillar 8) recommendations
accordance with
retention issues, etc.
international
P.V.6.1.2 Develop
standards, and MoF, IAUs, Application of recognised IA
and roll out capacity Capacity building plan, Qualitative
which provides Inspection standards included in internal Annual Y1-Y3
building plan for roll-out reports Quantitative
advice which is Directorate audit function
internal audit function

32
 Lead
Outcome sought Activities Indicator Data source Type Frequency
Agency
acted on by senior P.V.6.1.3 Review and
Institutionalised management
management institutionalise
MoF, IAUs, response mechanisms to Review reports,
management
Inspection internal audit reports necessary changes to Qualitative Annual Y1-Y2
response
Directorate (exmpl.Internal Audit Code of regulatory frameworks
mechanisms to
practice)
internal audit reports
Full understanding of the role
P.V.6.1.4 Awareness
of internal audit and its
training developed MoF, IAUs,
function as a support to Training modules Qualitative
and rolled out to Inspection Annual Y3-Y5
management to instilled Roll-out repots Quantitative
senior management Directorate
among PB’s senior
across PBs
management structures
Internal Audit report
P.V.6.1.5 Support containing information about
IAUs,
given to production of plan vs. actual audit
Inspection Annual report Quantitative Annual Y2
Internal Audit Annual performance, coverage,
Directorate
Reports, management responses and
other issues.
P.V.6.2.1 - P.V.6.2.2
Develop Enterprise
Risk Assessment IAUs, Developed Enterprise Risk
ERA Module
Module and support Inspection Assessment Module Qualitative
P.V.6.2. Internal Capability assessments Annual Y2-Y3
training for Risk Directorate, Rolled out training for PBs in Quantitative
audit coverage of Training evaluations
assessment MoF conducting risk assessments
PBs reflects risk-
implementation in
based audit
PBs
methodology
P.V.6.2.3 Produce of IAUs,
Internal Audit Plans Inspection Internal Audit Plans Risk assessments
Quantitave Annual Y3-Y5
reflecting risk Directorate, Internal Audit Plans
assessments MoF

Pillar VI: Accounting and Reporting

Outcome sought Activities Lead Agency Indicator Data source Type Frequency
P.VI.1. Production of financial information and financial accountability

33
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
Enhanced understanding of
P.VI.1.1.1 Build Training reports
the utilisation of scarce
awareness in PBs for Senior management
MoF, PBs resources and maximum Quantitative Annual Y2
senior management survey
impact of their timely
to monitor advances Skills transfer interviews
allocation and deployed
Revised financial regulations
P.VI.1.1.2- P.VI.1.1.3 to reflect responsibilities and
Review oversight accountability mechanisms Review report Annual Y2-
MoF Qualitative
P.VI.1. 1 Advances arrangements of PB based on review of oversight Revised regulations Y3
are cleared advances at MoF. arrangement of MSA
promptly and advances at MoF
balance on P.VI.1.1.4 Provide
advance accounts assistance to Consolidated Receivables
Reporting template, the
kept at reasonable produce a MoF report shows receivables by Quantitative Annual Y4
first report
levels Consolidated age
Receivables report
P.VI.1.1.5 Ensure
that IA functions in
each PB review Inspection Improved IA reports and
Annual Y3-
advances once in a Directorate, strengthened OFAG Final IA reports Qualitative
Y5
year and that OFAG MoF Account audit report
covers issue in Final
Accounts audit.
P.VI.2. In-year reporting
P.VI.2.1.1 Ensure Complete and timely in-year
timely roll-out of reports
Annual Y1-
IFMIS system to MoF Mandatory production and System reports Quantitively
Y5
replace IBEX in all publication of in-year
P.VI.2.1 Timely in-
PBs financial statements
year reports
P.VI.2.1.2 Perform
produced by IFMIS
review of workload MoF,
showing
and duties of Government Review reports Review reports Qualitative Annual Y1
expenditure to date
Government Accounts
against budget
Accounting Unit
P.VI.2.1.3 Provision
Utilisation of Financial Training reports Annual Y1-
of training of how to MoF - EMCD Qualitative
reports for decision making Decisions Y2
use financial reports

34
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
for decision-making
to senior staff of PBs
P.VI.3. Completeness of annual financial reports
P.VI.3.1.1 Consider
valuation of and
accounting for assets
P.VI.3. 1 Annual
as an issue to be
accounts include MoF – IPSAS rollout – valuation and
considered as part of Qualitative Annual
information on Government inclusion of System reports
IPSAS roll-out – Quantitative Y1—Y5
tangible assets and Accounts assets
support will be
guarantees
needed across PBs
as part of multi-year
engagement
P.VI.4. Transition to IPSAS
P.VI.4.1 IPSAS P.VI.4.1.1 Update
accounting fully and validate current Revised roadmap
Current IPSAS roadmap
rolled out and all IPSAS roadmap; MoF Technical assistance Qualitative Annual Y1
updated and validated
financial identify technical needs assessment
statements assistance needs
prepared in P.VI.4.1.2 Secure Government/donor funding Government reports Qualitative
MoF Annual Y1
accordance with funding secured Donor reports Quantitative
internationally
recognised P.VI.4.1.3 Capacity
Qualitative Annual Y2-
standards Building (Training on MoF - EMCD Roll-out of roadmap Reports, Road map
Quantitative Y5
IPSAS)

P.VI.5: Revision of Chart of Accounts

P.VI.5.1 Revised
P.VI.5.1.1 - PVI. The budget presented in a
chart of accounts
format that reflects the most
comply with GFSM 5.1.2. Assessment
and revision of the important classifications and
2014 for improved
existing chart of the classification embedded Gap assessment report
Government Annual Y1.
MoF in the chart of accounts to Revised Chart of Quantative
Statistics, adoption accounts in line with Y2
the GFSM 2014, IMF ensure that all transactions Accounts
of IPSAS and
technical note on can be reported in
better PBB
chart of accounts, accordance with any of the
reporting
IPSAS, Programme classifications used.

35
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
based budget
reporting and IPSAS

36
Pillar VII: External scrutiny and audit
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
P.VII.1. External Audit
P.VII.1.1.1 New Staffed and functioning New
Audit Board to HOPR Audit Board overseeing Board minutes Qualitative Annual Y1
oversee OFAG OFAG
P.VII.1.1 Complete
P.VII.1.1.2 Review
autonomy, including
options for
financial
determining budget
independence,
ceiling for OFAG,
secured for Supreme Options paper, Audit
including Audit Board Adopted preferred option Qualitative Annual Y1
Audit Institution Board minutes
percentage
(OFAG)
appropriation
model, separate
appropriation, etc,
P.VII.1.2.1
Development of a
guidance note for
all PBs about how OFAG Guidance Note Qualitative Annual Y1
and when to
respond to Audit
Reports PBs responding in a timely
P.VII.1.2 Audit
P.VII.1.2.2 Review manner to Audit Reports
reports and
of legislation and
recommendations
regulations to
responded to in a OFAG, MoF,
ensure good Revised legislation Qualitative Annual Y2
timely manner by all HoPR
practice and
PBs across
reflection of above
government
guidance note
P.VII.1.2.3
Reinvigorate roll-
Tracking system
out of audit OFAG Tracking system in place Qualitative Annual Y2-Y3
Progress reports
recommendations
tracking system

P.VII.2. External Scrutiny

37
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
Capacity building plan for
P.VII.2.1.1 Review committee members and Review of capacity
P.VII.2.1. A fully HoPR Qualitative Annual Y2
the capacity of PAC parliamentary secretariat Capacity building plan
capacitated Public
produced and rolled out
Accounts Committee
P.VII.2.2.2 Roll-out
which is able to use
of capacity building Capacity developed,
the work of OFAG to
plan, to include the including on gender and
hold it and the HoPR Capacity bulding reports Qualitative Annual Y3-Y5
review of climate climate related expenditure
executive to account
related expenditure issues
and gender issues
Ongoing capacity assistance
P.VII.2.2.1 Review reflecting capacity needs Review report
of capacity needs OFAG assessment in IFMIS Capacity building Qualitative Annual Y1
P.VII.2.2. OFAG of OFAG implementation, IPSAS, reports
keeps abreast of climate and gender
reforms and P.VII.2.2.2 Ongoing
developments across capacity assistance OFAG’s capacity to Capacity building
OFAG Qualitative Annual Y2-Y5
government, reflecting capacity undertake IT audit enhanced reports
enabling it to remain needs assessment
relevant in its advice P.VII.2.2.3 Training
and oversight of OFAG staff to
enable audit of
Examples of GRB and Green Training materials Qualitative
Gender related OFAG Annual Y3-Y4
Budgeting/Audits Audits Quantitative
Budgeting and
climate related
issues
P.VII.2.3 Parliament
has capacity to
P.VII.2.3.1 Capacity
review draft
development of
legislation to ensure Training materials,
parliamentarians to Impact of existing laws and
that good PFM reports
assess and esure HoPR policies is assessed and Qualitative Annual Y3
practice is reflected Overview of legislative
legislation legislation adjusted.
and impact on changes
encompases good
existing laws and
PFM practice.
policies is assessed.

P.VII.3 Accountability and the media, CSOs

38
 Outcome sought Activities Lead Agency Indicator Data source Type Frequency
P.VII.3.1 Media P.VII.3.1.1
Media, civil society and
sector and NGOs Programme of
other citizen groups enabled Training reports
aware of work of training and Qualitative
OFAG to engage on budget Media articles Annual Y2
OFAG, and plays awareness raising Quantitative
formulation, budget Citizen Budgets
role in enhancing for media and
execution and oversight
accountability CSOs

Pillar VIII: Cross-cutting Issues

Outcome sought Activities Lead Agency Indicator Data source Type Frequency
P.VIII.1. Gender Budgeting
MoF, Women's
Affairs Office,
Women's Affairs
Departments in 16
line ministries,
Framework to map
Women's Affairs Review
all polices in place
Bureaus in 10 documentation
P.VIII.1.1.1 Review of Gender Review of GRB
regional Revised GRB Qualitative Annual Y1
Policy budgeting guidelines
governments and in guidelines
with clear linkages to
two special Review report
strategic frameworks
administrative
P.VIII.1.1 Gender-
regions and The
related expenditure
Ethiopian Women’s
linked to a robust
Development Fund
policy framework
(EWDF)
GRB budgeting
MoF, Ministry of
P.VIII.1.1.2 Review of GRB guidelines ensure Revised guidelines,
Women and Social Qualitative Annual Y2
budgeting guidelines linkages to the review report
Affairs
strategic framework
Gender PEFA
assessment report
MoF, Ministry of
P.VIII.1.1.2 Conducting Gender inform the further
Women and Social GR PEFA Quantitative Year 2
PEFA implementation of
Affairs
the PFM strategy.
Recommendations

39
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
included in Annual
Work Plans
P.VIII.2. Professionalisation
Government
Standards minutes,
P.VIII.2.1.1 Continue to
implemented direct memoranda,
advocate for professionalisation
AABE both technical directives Qualitative Annual Y1
with PMO to ensure agreement
practice and ethical Professionalisation
P.VIII.2.1 of Professionalisation strategy
standards strategy
Professional
standards applied
The
across the PFM
professionalisation
sector in Ethiopia P.VIII.2.1.2 Promulgation of
policy is part of a
Professionalisation Strategy Qualitative
AABE, PBs broader public Strategy reports Annual Y2-Y5
Quantitative
procurement
capacity-building
strategy
P.VIII.3. Climate Responsive PFM
Revised MoF
structure and
Capacity building
P.VIII.3.1.1 Establish and enhanced capacity of
plans and reports
capacitate Climate Budget the stuff to perform
MoF TORs Qualitative Annual Y1-Y3
Department in Budget climate change
Job Descriptions
Directorate, MoF mainstreaming in
Department mandate
PFM
P.VIII.3.1 Budgets
fully reflect CRGE
Steps to integrate
and other climate
climate change
related policies of
considerations into
government
P.VIII.3.1.2 Review of existing the budget circular.
budgeting practices to better Provided guidance to Review report
Climate Budget
identify the gaps and PBs on integrating Revised budget Qualitative Annual Y2
Department, MoF
weaknesses currently evident climate change into circular guidance
planning and
budgeting processes,
including the
incorporation of

40
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
climate-related fiscal
risks
Assessment
framework in place to
P.VIII.3.1.3 Development of support appraisal of
assessment frameworks for budget submissions
Climate Budget Assessment
appraisal of government budget as per climate- Qualitative Annual Y2
Department, MoF frameworks
proposals as per government related policies
climate policies commitments and as
per relevant sectoral
policies)
Budget Circular with
Guidance to PBs to
integrate climate
P.VIII.3.1.4. Steps to integrate change into planning
Climate Budget Revised Budget
climate change considerations and budgeting Qualitative Annual Y2-Y3
Department, MoF Circular
into the budget circular. processes, including
the incorporation of
climate-related fiscal
risks.
Expenditure Reviews
P.VIII.3.1.5 Conduct Climate (either with Climate
Public Expenditure
related Public Expenditure MoF, CRGE PBs integrated or self- Quantitative Annual Y3-Y4
Reviews
Review standing Climate
Review)
Recommendations
around strengthening
P.VIII.3.1.6 Review upcoming and making PFM
Disaster Risk Financing MoF practice climate Review document Qualitative Annual Y2
Strategy smart incorporated in
mainstream reform
plans
P.VIII.4. Building Financial Management Literacy across government
P.VIII.4.1 Greater P.VIII.4.1.1 -P.VIII.4.1.2 A set Tailored made Modules
PFM compliance PFM training modules designed training modules Training evaluation Qualitative
MoF - EMCD Annual Y1-Y5
grounded in high for senior management of PBs utilised for Senior management Quantitative
level of PFM and parliamentarians on institutional capacity skills transfer survey

41
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
awareness across finance committees, including building existing
PBs leadership and new appointees. senior management
other key and induction of the
stakeholders new ones
Roll-out of training to
leaders in PBs and
key stakeholders
Reports on the
Consultative
workshop
Develop PFM annual
P.VIII.4.1.3 Assessment of the (commissioned by) Findings and
workplans include Qualitative
potential for CSOs and media’s MoF validation of Y2
actions with CSOs
engagement in PFM. recommendations
and media
report
work plan/s

Improved capacity of
CSOs, media and
parliamentarians in
promoting
Training materials
P.VIII.4.1.4 Roll out of training critical financial
Training valuations Qualitative
to Civil society, media, and MoF - EMCD literacy and helping Annual Y3-Y5
CSO research Quantitative
parliamentarians wider audience
Media coverage
(citizens) understand
PFM processes and
foster greater
accountability
P.VIII.5. Enhancing Fiscal Federalism
Progress in
P.VIII.5.1.1 Support to IFMIS MoF- IFMIS Qualitative
P.VIII.5.1 Improved implementation of Annual report Annual Y2-Y5
implementation across SNGs Directorate Quantitative
overall PFM IFMIS
performance of P.VIII.5.1.2 Inclusion of SNGs SNGs included on
Steering committee
SNGs through on PFM Technical Steering MoF-EMCD PFM Technical Qualitative Annual Y1-Y5
minutes
support to core Committee Steering Committee
functions and roll- P.VIII.5.1.3 Assisting regions MoF- relevant Joint action plan MoU between federal
out of IFMIS with reform implementation to departments as developed with KPIs government and Qualitative Annual Y1-Y5
improve the quality of applicable SNGs

42
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
accounting, reporting, and FPPPA Memoranda of
integration with other PFM understanding Annual progress
functions, internal audit, between federal reports against KPIs
procurement, budgeting government and
(including programme SNGs.
budgeting), asset and
investment management
woredanet infrastructure and
data centre management
Action plan detailing Damage assessment
P.VIII.5.1.4 Supporting conflict-
federal government reports Qualitative
affected regions to restore their MoF-EMCD Annual Y1-Y5
support Implementation Quantiative
PFM system
reports
P.VIII.5.1.4 Supporting regions
to report to Federal SNGs able to tag
Report on climate
Government on the use of MoF climate related Quantiative Annual Y2-5
expenditure
funds allocated for climate expenditure
Expenditure
P.VIII.5.2.1 Conducting
consultative fora with the Consulative For a Meeting minutes and
OFAG Qualitative Annual Y1-Y5
Regional Office of Auditors with ORAGs communiques
General (ORAGs)
P.VIII.5.2.2 ORAG Capacity
Peer-to-peer support
Building training/peer-to-peer OFAG Training reports Qualitative Annual Y1-Y5
available
support from OFAG
P.VIII.5.2.
P.VIII.5.2.3 Mentoring and
Strengthened Peer-to-peer support
peer-to-peer capacity building Training reports
accountability available on
support to REACCs in FEACC Capability Qualitative Annual Y2-Y4
institutions of SNGs corruption prevention
corruption prevention and assessments
and detection
detection
Capacity of the
regional PACs and
P.VIII.5.2.4 Building the
OFAG /MoF-EMCD Budget and finance Training reports Qualitative Annual Y2-Y4
capacity of regional councils
standing committees
built

43
Outcome sought Activities Lead Agency Indicator Data source Type Frequency
P.VIII.5.3. Enhanced
revenue generation P.VIII.5.3.1 Capacity Building Regional Bureaux of
Training reports
and revenue Support to regional Bureaux of MoR Revenue capacities Qualitative Annual Y2-Y4
Capacity assessment
administration Revenue enhanced
capacity of SNGs

44
5. Evaluation of the PFM Strategy
Evaluation is a much more resource and skills-intensive process than monitoring, and it
requires sophisticated analytical skills and expertise in various data collection and analysis
methods. In the case of PFM strategy, evaluation can be carried out either internally by
program staff (if they have the right skills and capabilities) or commissioned to be conducted
by external providers.

Given the nature of the PFM strategy design, based on PEFA assessment and other relevant
documents that could be considered part of a broader type of ex-ante evaluation process the
new strategy should undergo interim and ex-post evaluations3.

The ex-post evaluation should utilise the OECD-DAC evaluation criteria. It should assess the
relevance, coherence, efficiency, effectiveness, sustainability and impact of PFM reform and
the external support provided to those programmes. It should also pay attention to three
dimensions of PFM reform processes:
• The contexts in which reforms have taken place;
• The Mechanisms adopted for the design, management, and delivery of reforms;
and
• The consequent Outcomes achieved

Figure 3: Overview of the evaluation framework

Evaluation framework and evaluation questions4

The ToRs for the mid-term and final evaluation should state or call clearly for the design
methodology which utilises the DAC criteria. Below are examples of questions that could be
addressed within those evaluations:

3
Ex-ante evaluation is done to design a program, an interim evaluation is done during the implementation, and
an ex-post evaluation is done after completion of the program.
4
This is not the exhaustive list of questions but rather the basis for more detailed evaluation questions to be
developed by the evaluation team and key stakeholders.

45
A. Inputs & context: the design of PFM reform
EQ 1: What has been the nature and the scale of PFM reform inputs provided by the
Government and by Donors?
EQ 2: What types of structures have been used to design and manage these reform inputs?
Have these structures served to provide a coordinated and harmonised delivery framework?
EQ 3: What types of complementary actions have Donors taken to support PFM reforms, and
what has been their significance? Have they had any influence on the external constraints to
reform?
EQ 4: To what extent has there been domestic, public or regional institutional pressure in
support of PFM reform and what has been the influence on the external constraints to reform?
EQ 5: How relevant was the PFM reform programme to the needs and the institutional
context? Was donor support consistent with national priorities? To what extent were
adaptations made in response to the context and the changing national priorities?

B. Outputs: the delivery of PFM reform

EQ 6: What have been the outputs of the PFM reform process and to what extent has direct
donor support contributed to these outputs?
EQ 7: How efficiently were these outputs generated? Was the pacing and sequencing of
reforms appropriate and cost-effective? Was the cost per output acceptable?
EQ 8: What have been the binding external constraints on the delivery of PFM reform outputs:
political, financing or policy factors? How has this varied across different PFM reform
components?

C. Outcomes: an overall assessment of PFM reform & of donor support for PFM reform
EQ 9: What have been the intermediate outcomes of PFM reforms in terms of changes in the
quality of PFM systems?
EQ10: To what extent have the outcomes generated been relevant to improvements in the
quality-of-service delivery, particularly for women and vulnerable groups?
EQ 11: Have reform efforts been effective? If not, why not? If yes, to what extent have PFM
reform outputs been a causal factor in the changes identified in intermediate outcomes?
EQ 12: To what extent do the gains identified at the Intermediate Outcome levels appear
sustainable? Is the process of PFM reform sustainable?

D. Impact: assessment of the impact that has been achieved on a component-by-

component and pillar-by-pillar basis
EQ13:What changes have been generated in the PFM system, as measured by changes in
the quality of:
i) Strategic budgeting;
ii) Budget Preparation (including budget deliberation by the
Legislature);
iii) Resource management (covering both inflows and
outflows);
iv) Internal controls, audit and monitoring;
v) Accounting and reporting; and
vi) External Accountability
vii) Integration of Cross-cutting issues
EQ15: Identify any other benefits that had arisen, despite not being included in the original
Reform Programme of Outputs or Key Activities.

The evaluations must be planned to ensure necessary preparations and financial, human or
other resources to complete the evaluation. Depending on the tasks and depth of the
evaluation, it can last from three to six months.

46
The PFM Strategy should undergo a mid-term evaluation process and highlight the
achievements of the first two years of the strategy in relation to the expected outcomes and
the level of achievement of the objectives of the strategy. The Mid-term evaluation is important
as it would serve to define a more precise action plan for the following period and for a better
assessment of financial needs for the implementation of the strategy for the remaining period
by identifying needed programming resources within the frame of the Medium-Term Budget
Programme.

47
6. ANNEX 1: Instructions for the PFM strategy and Action Plan Monitoring and Reporting and
Proposed Reporting Templates
Given that the MoF is already using Microsoft365, there is potential to develop simple tools through a combination of MS Planner, MS Forms,
MS SharePoint, MS PowerAutomate, and PowerBI to address some of the administrative burden MEL process will entail, however, the
templates below could be used to inform and support the creation of the MEL system that leverages on the existing technology used by the
public service in Ethiopia to streamline/automate aspects of PFM MEL system.
This MEL Framework document recommends that the annual progress report should be widely published. To this end, the steering committee
could consider developing a communication strategy/plan to inform the public of progress incrementally along the reform process.

THE INSTRUCTIONS FOR THE PFM STRATEGY AND THE ACTION PLAN MONITORING AND REPORTING

1. Introduction
These instructions define the actors and the procedures for monitoring and reporting on the implementation of the PFM Strategy and Action Plan. The purpose
of the Instructions is to unify the monitoring and reporting process by defining the procedures, responsibilities, deadlines, and templates. The primary users of
these Instructions are the Ministry of Finance, state administration bodies and independent institutions that take part in the implementation of the PFM Strategy.
The secondary users are the wider public, NGOs and other organisations interested in the PFM.

2. PFM monitoring and reporting actors, processes, and deadlines

1. The overall monitoring of the implementation of objectives, indicators and activities of the PFM Strategy is carried out by the MoF through regular
communication with the relevant parties.
2. The monitoring of the implementation of different activities, linked performance indicators and objectives is carried out by each department involved at
the MoF and other relevant parties in charge of these activities as indicated in the Strategy.
3. The reporting is semi-annual and annual. The preparation of the semi-annual and annual reports is coordinated by the MOF based on the information
received from the various departments at the MoF and other relevant parties in charge of respective objectives.
4. The semi-annual report will be prepared in the following way:
a. By the xx date, the MoF shall send a letter and/or an email to various departments at the MoF and other relevant parties to request to submit a
semi-annual report.

48
 b. By xx date, relevant departments at the MoF and other relevant parties in charge of the activities as indicated in the Strategy shall submit a
report in the form provided in the instruction. If respective structures, ministries, and independent institutions do not provide information in time,
the State Minister of Finance can take other actions.
c. The MoF shall analyse the information received from respective structures/institutions, conduct the assessment by completing the database
and compile a draft Semi-annual Progress Report. They may request additional information from the respective responsible structures if the
information submitted is unclear, sufficient, or unsatisfactory.
d. By xx date, the MoF shall finalise the Semi-annual Progress Report and submit it to the State Minister of Finance and the Steering Committee
for consideration.

5. The annual report will be prepared in the following way:

a. By the xx of each year, the MoF (the team responsible for PFM strategy monitoring) shall send a letter and /or email to the respective
structures/institutions to remind them of the submission of annual reports on the implementation of the PFM Strategy.
b. By the xx of the following year, the institutions in charge of the implementation of results shall summarise the information received from partners
in the implementation and submit summarised information to the MoF in the format provided by the instructions.
c. The MoF shall analyse the information received from institutions in charge of the implementation of results, consolidate the information and
prepare a draft Annual Progress Report. They may request additional information from these structures/institutions if the submitted information
unsatisfactory or insufficient.
d. By the xx of each year, the MoF shall submit the draft Annual Progress Report to the State Minister and the Steering Committee for consideration
and approval.
6. If needs be, the MoF can organise workshops to guide the staff of responsible units and help them strengthen the skills needed to prepare PFM-related
reports.

Two Tables could be used to provide semi-annual and annual information on the implementation of the PFM Strategy:
a. Semi-annual Report Template
b. Annual Report Template

49
3. Semi-annual reporting templates and instructions
7. The format and instructions on filling in the semi-annual report template are provided below. It should be used by all responsible units to provide semi-
annual information on the implementation of activities. This Table is in Excel format.

Semi-annual Report Template

Responsib Achievements Next steps Expected time of

Nr Activity Deadline
le Unit (Progress in (milestones) realisation
Implementation)
Column
Column 2 Column 3 Column 4 Column 5 Column 6 Column 7
1
Filled in by
Filled in by each Filled in by each Filled in by each Filled in by each Filled in by each
MoF Filled in by MoF
structure/institution structure/institution structure/institution structure/institution structure/institution

Filling in instructions
Column 1 In this column the Number of the Action in the Action Plan is indicated. This column is filled in by the MoF.
In this column the activities from the Action Plan are provided. This column is filled in by each structure/institution. In this column the
Column 2
indicators for the realization of results are listed.
Column 3 In this column the responsible unit for reporting is indicated
Column 4 In this column the deadline for implementation of respective activity is provided. This column is filled in by each structure/institution.
In this column the description of major achievements in implementing the activity is described. Each responsible structure should provide
only strategic information on the realization of activity which would help to determine the realization of the result. The achievements
Column 5 should be supported by evidence, if possible (e.g. statistical data, comparisons, etc.). Routine and administrative information (the number
of meetings organized, working groups established, etc.) should be avoided. For example, if the law was prepared implementing the
activity, the achievements should explain what will change as a result briefly summarizing the main benefits of the law rather than just

50
 making a fact that the law has been prepared and when. The information presented under this column should justify the status of
realization.
In this column the next steps to implement the activity should be provided. This column is filled in only for those activities of which the
Column 6
status is “partially implemented” or “not implemented”. This column is filled in by respective structure/institution.
In this column the institution must indicate the expected new date of the realization of activity based on the next steps. This column is
Column 7
filled in only for those activities of which has not been completed or have not started yet.
Examples:
1. During the reporting period the directorate
has organised one training courses of 3 days. The next
The following number of participants attended training
the training courses, as well as the total % of courses are
staff trained until Q2 is presented in the table planned to take
5.2.2.1. below. place on
Perform
XXXXX, XXX
professional
% of Staff and XXX.
development The Director Nr Staff
and training on of Ministries Trained until
Trained
6 officials Q3-2022
the audit Expenditure
trained in 3 3 Q 2022 Q I 2023
methodology Management Ministry of
days 2 33%
and practices and Control Education
for internal Directorate Ministry of
2 33%
auditors in the Transport
public sector Ministry of
1 17%
Economy
Ministry of
1 17%
Agriculture
In total out of X staff, until Q3 are trained XX
staff or XX% of the total staff of central
ministries, to be trained.
4. Annual reporting templates and instructions
1. The format and instructions on how to fill in the Annual Report Template are provided below. This format provides information on the implementation of
activities and progress achieved in implementing specific objectives and performance (outcome) indicators.

51
 2. The Annual Report Template is more analytical than the semi-annual report. Apart from information on activity implementation, the Annual Report
Template asks to provide information on the progress towards achieving objectives and performance indicators. Therefore, the Annual Report Template
is more elaborate.

4.1. Annual Report Template

I. Information on progress against objectives (This information should be provided in Word format)
In this section, the institution in charge of the specific objective provides a brief overview on the implementation of specific objectives. This section is
prepared based on the overall progress in implementing activities and on the achievements against performance indicators (specific objectives and results).
The achievements in this section should be illustrated using graphs, tables, or pictures. The key factors that influenced on the achievement or failure of
results are provided. The assessment of whether the target values of performance indicators are likely to be achieved should be provided. Also, priority
actions to improve performance should be provided.
A Summary of the achievement score should be included in this section (score could be given on the bases of a sliding scale:1. The achievement score is
progressing positively; 2. The achievement score has not changed, and 3. The achievement score shows a negative trend).
II. Information on progress against performance indicators and activities (This information should be provided in Excel format)
The Template below provides an example of information on the achievement against performance indicators that could be reported on and implementation
of activities. To report on the achievement of performance indicators, the actual achievements for the two previous years (reporting years and the year
preceding the reporting year) should be provided, as well as the target value for the respective year. The information on the achievement of performance
indicators should be provided by the institution in charge of performance indicators as indicated in the Consolidated Strategy Matrix. Respective institutions
also must report on the implementation of activities.

Note: the first annual report will be establish the baseline data. Therefore, during the first annual report, the column Baseline Data will be filled in by
respective units.

4.2. Performance Assessment Framework (PAF)

Performance Assessment Framework can be used to measure the progress of indicators versus targets established in the strategy.
Policy Area

1.i. <description of policy area>>

52
 Indicator Indicator
Objective Baseline Data and Indicator Indicator Indicator Indicator Indicator
Objective Target Target
number Source of Data 2023 2023 2024 2024 2025
2023 2025

Description of Objective
1
<<objective>>

Indicator name Baseline 2022

<<description of indicator>>

1.a
Unit measure: Source of
Verification
Responsible Unit for reporting

On the implementation of the activities the same template as indicated above for semi-annual reporting will be used.

Example
Pillar no
Fiscal rules, forecasting and fiscal responsibility framework
Indicator Progress Indicator Achievements
Baseline
Obj.ind. number Policy Objective Achieved Versus Target Level versus Target
Level 2020
Level 2023 Baseline 2024 Level %
Description of Objective
Objective x - Sustainable and prudent fiscal frameworks, based on clearly stated fiscal objectives, underpin the budget

1
Indicator
Example: expenditure outturn by
+15
composition to be +-#%

53
 The achievement score is progressing
positively
The achievement score has not
Legend: changed
The achievement score shows a
negative trend

54
Proposed Semi-annual Report Template5
1. Introduction
< short introduction on the scope of the report >>
2. Overview of implementation of the PFM strategy
< brief information on the overall status of implementation, including a graph on the overall
number of activities started, not started, planned to start after Q1 >>
3. Overall progress in implementing the pillars of the Strategy
< brief information on the overall status of implementation of 6 pillars, including a comparative
graph for 6 areas >>
A more detailed assessment of the progress made under each of the pillars is provided below.
Pillar I – Budget Reliability
Pillar II: Transparency of Public Finances
Pillar III: Management of assets and liabilities
Pillar IV: Policy-based fiscal strategy and budgeting
Pillar V: Predictability and control in budget execution
Pillar VI: Accounting and Reporting
Pillar VII: External scrutiny and audit
Pillar VIII: Cross Cutting
4. Overall performance according to implementing structures
< brief information on the overall status of implementation by responsible units, including a
comparative graph on the overall number of activities started, not started, and planned to start
after Q1 for each unit>
5. Conclusions and Recommendations
This section must present very shortly and, in the bullet, points out the main issues observed
during the assessment. The conclusions must present the most concerning issues which are
common for many actions and can be linked to issues of both internal and external influencing
factors.
At the part of the conclusions, one of the sections must be dedicated specifically to the quality
of submissions, as this will be one of the challenges that MoF will face during the monitoring
process.
The report must also list some recommendations for the Minister of Finance related to some
specific issues observed if considered necessary.

ANNEX 1: DETAILED EXPLANATION OF IMPLEMENTATION OF EACH ACTIVITY

This section is prepared using the information received from the relevant departments and
stakeholder institutions. This information is supplementary information for those who will want
to have a more detailed picture of the implementation of each individual activity. The
information in this Annex can contain information presented in/or using the Semi-annual
Report Template.
Note: All narrative reports should not exceed 5-7 pages at the maximum.

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The Semi-annual Progress Report should provide an overall picture of the areas where progress is satisfactory
or unsatisfactory, brief info on the reasons for unsatisfactory results and suggestions for the next steps that could
be taken to improve performance on implementation of activities. The semi-annual report is a working document
that should be used for internal purposes, for review of the progress made within a given year of implementation
of the strategy and any information on delays of implementation and the issues of concerns should be highlighted
in this report.

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Proposed Annual Progress Report Template6
1. Executive Summary
In this section, brief information on the progress against each specific objective is provided
based on performance indicators and the implementation of activities (only achievements
implementing the most important activities should be presented). The importance of activities
is decided based on the scope of the impact of the activity, attention on the political agenda,
and interest of the donor community, media or civil society. Graphs, tables, and pictures can
be used to support the achievements.

This section can also be used to brief the decision-makers, the general public or stakeholders.

The following graphs could be used to illustrate the progress:

Graph 1: The overall progress implementation of activities in 201X (a pie graph to show the
overall ratios fully implemented, partially implemented, not implemented, and planned to start
after 201X)
Graph 2: The overall assessment of reaching the target indicators (the graph to be presented
for years after 201X)

2. Overall progress in implementing the Strategy

This section could have two sub-sections. One could be dedicated to overall progress using
statistical data (e.g. share of improved indicators, implemented activities). The second sub-
section could describe successes or failures in achieving progress under each pillar.

2.1. Overall information on the progress of Strategy by pillars

In this sub-section, information on the progress against performance indicators and activities
should be provided.
Note: the first annual report is often used for establishing the baseline data, so in that report,
there should not be comparative analyses on progress made under each specific indicator.
The following reports will include analyses of the progress made towards reaching the targets.

The information on improved and not improved performance indicators should be presented.
This information will show whether the PFM Strategy is coming closer to achieving the targets.

The overall annual information on the implementation of all activities should be provided in
this section.

Several graphs can be used to support the achievements:

1. A pie chart on the number of well-progressed and not progressed performance
indicators, this information can also be presented by each pillar.
2. A pie chart of fully implemented, partially implemented and not implemented activities;
3. A graph on the number of fully implemented, partially implemented and not
implemented activities by each of the seven pillars of PFM;
4. A graph on the number of fully implemented, partially implemented and not
implemented activities by each institution.

2.2. Progress of implementation of reforms under each of the pillars

Progress against activities

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The focus of the Annual Report is to check on the implementation progress achieved against each objective,
using the information on performance indicators. The annual report, therefore, must present information on the
progress of all seven pillars and the impact of the activities undertaken in the current reporting year. The annual
report will have a broader audience than the semi-annual report and should be widely published.

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<brief information on the overall status of implementation of each of the components under
each of the pillars, including a comparative graph for all components>
• Graph x Overall ratio of implementation (pie graph)
• Graph x: Implementation of activities by specific component (number of activities)
<for each component, short information must be provided on the main achievements in terms
of reforms undertaken. The information should not be a simple description of activities but the
effects produced by implementing activities>.
Progress against performance indicators
<The progress against objectives will be measured using respective performance indicators
under each pillar>
Next steps for timely implementation
The next steps for timely implementation should be recommended in this section.
2.3. Priority actions for next year
This section should summarise the actions that the Government or institutions should
implement to overcome the challenges, and improve performance along each specific
objective. A summary list of actions should be provided for each objective and a list of common
actions if applicable. Any capacity-building activities to address the failures and
underperforming should also be listed.

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