Addis Abeba – Meseret Demisse, the head of the Office of the Federal Auditor General (OFAG), delivered a disquieting revelation during her appearance before members of Parliament (MPs) on 27 June 2023, when she disclosed that government institutions failed to collect over 15 billion birr in revenues and other receivables during the previous Ethiopian fiscal year. This revelation has raised serious concerns about financial management and accountability in the country.
Meseret highlighted that the country continues to experience significant financial losses in the form of uncollected tax revenues. She assumed the role of head of the OFAG last year, taking over from Gemechu Dubiso, who had held the position for over 12 years. The reports issued by OFAG serve as a testament to the alarming extent of waste caused by both theft and inefficiency. These reports consistently reveal a pattern of uncollected revenues, unaccounted and illicit expenses, and financial irregularities that have been brought to the attention of legislators for the past 14 consecutive years.
According to the latest report, the Ministry of Revenues and Ethiopian Customs Commission discovered to have 13.4 billion birr in outstanding accounts receivable. These unsettled collectible amounts have been overdue for a period ranging from one to six years.
Despite significant mismanagement, Finance Minister Ahmed Shide acknowledged that Ethiopia is currently grappling with a severe fiscal imbalance caused by various factors, including a decline in tax revenue. This announcement came during the presentation of the budget proposal for the upcoming Ethiopian fiscal year, which took place a month ago. According to the finance minister’s report, tax collection for the first three quarters of the year amounted to 282 billion birr, accounting for only 70.5% of the planned target.
For years, government officials have expressed concerns over the underperformance of tax income collection. They have been pointing to Ethiopia’s tax-to-GDP ratio, which has been on a declining trend in recent years. This ratio dropped from 10.7% five years ago to 7.1% last year, significantly lower than the sub-Saharan African average of 17%. AS