Wolaita Sodo University

College Of Business and Economics

Department Of Public Administration and Development Management

Lecture Power Point

Course Name: Public Financial Administration And Budgeting
Academic Year: IV Semester I
Chapter: Four
 Chapter Four
Budget Structures and Practices

• The budget can be structured in many ways based on the

organization’s (or the country’s) standards and method of
budgeting. One of the mostly adopted approaches for structuring
the budget is under two main categories; capital budgeting and
recurrent/operational budgeting.
• A budget practice is a procedure that assists in accomplishing a
principle and element of the budget process.
• Budget practices must be clearly related to activities identified in
the budget process definition.
4.1 The Federal Budget

• The federal budget is the annual statement of the federal government’s

expenditures and revenues.

• It entails/needs the efforts of thousands of staff in the executive and

legislative branches; and the attention of numerous interest groups.

• It involves of decisions, complicated rules and procedures, and debate over

the composition and amount of public revenue and spending.

• The federal budget is a compilation of numbers about the revenues, spending,

and borrowing and debt of the government.

• Revenues come largely from taxes, but some from other sources as well (such
as duties, fines, licenses, and gifts…etc).

• Spending involves such concepts as budget authority, obligations, outlays,

and offsetting collections.
 Conti…

• Budget authority refers to the power to make decisions about how money will be
spent within an organization. This includes creating budgets, approving
expenditures, and monitoring spending to ensure it aligns with organizational goals.

• Obligations refer to the amounts of money and organization is required to pay,

often resulting from previously agreed-upon contracts, loans, or other financial
commitments.

• Outlays are the actual expenses incurred by an individual or organization, which can
include everything from rent and utilities to employee salaries and raw materials
for production.

• Offsetting collections involves moving funds from one account to another to cover
expenses or settle debts, ensuring that all financial transactions are properly
accounted for.
• The federal budget consists of two main groups of funds: federal funds
and trust funds.

• Federal funds which comprise mainly the general fund largely derive
from the general exercise of the taxing power and general borrowing
and for the most part are not earmarked by law to any specific program
or agency.

• One component of federal funds, called special funds, is earmarked as

to source and purpose. The use of federal funds is determined largely
by appropriations acts.

• An appropriations act is a law passed by the legislative body

authorizing the expenditure of public funds for specific purposes.
 Cont…
• Trust funds are established, under the terms of statutes that
designate them as trust funds, to account for funds earmarked by
specific sources and purposes.

• The Social Security funds are the largest of the trust funds;
revenues are collected under a Social Security payroll tax and are
used to pay for Social Security benefits and related purposes.

• The unified budget includes both the federal funds and the trust
funds. The balances in the trust funds are borrowed by the federal
government; they are counted, therefore, in the federal debt.
4.2 State and Local Government Budgets
• State and local governments play an essential role in providing public
goods and services to their residents.

• Local budgets vary significantly due to factors such as historical

traditions, cultural diversity, and different types of governance
structures.

• There's no one-size-fits-all model for local government budgeting.

• However, all effective sub-national budget systems should aim to

achieve three main goals: fiscal discipline and expenditure control,
prioritized resource allocation, and operational efficiency and
effectiveness.
Conti…
• Fiscal discipline and expenditure control refers to the ability of local
governments to manage their finances responsibly and ensure that spending is
kept within reasonable limits.

• Prioritized resource allocation means that resources are distributed according

to the most pressing needs of the community, ensuring that the most critical
areas receive the necessary funding.

• Operational efficiency and effectiveness involves using resources in a way

that maximizes their impact and ensures that services are delivered effectively
and efficiently to meet the needs of the community.

• This means that local governments must ensure they spend their resources
wisely, focus on the most important needs of their community, and use their
resources efficiently to maximize the impact of their spending.
• Prescription for effectiveness include systems and processes that
emphasize
 Transparency in the definition of roles and responsibilities and
decision making
 Comprehensiveness in the incorporation of all revenues and
expenditures and full accounting of all budgetary transactions
 Processes and methods to establish policy and priorities, including an
outward-looking fiscal framework, focus on service outputs and
outcomes
 Expenditure planning based on established priorities, relating spending
to service levels and allowing flexibility in the use of resource inputs
 Accountability and control reinforced by comprehensiveness;
prioritization; and systematic budget and expenditure reviews,
execution controls, and post-execution reporting and auditing
• In many general purposes of local governments, the budget is
composed of three separate, but connected parts: (1) annual operating
budget; (2) capital budget; and (3) the enterprise or utilities budget.

• The annual operating budget lays out the anticipated/expected

spending that will be done by all public agencies during the upcoming
year.

• Example, spending for public safety, planning and development, social

services.

• The annual operating budget also lays out the revenues that are
expected to be received by the local government during the upcoming
year.
• The capital budget represents the portion of a government's budget that is
dedicated to investing in long-term infrastructure projects with a useful life
extending into the future.

• This includes things like building roads, bridges, schools, hospitals, and other
public facilities.

• The capital budget is the outcome of a comprehensive planning process that

involves identifying the needs of the community and determining which
projects will have the greatest impact on improving public services.

• General purpose local governments, such as cities and counties, may also
categorize certain services like water, electricity, or waste management into
separate "enterprises" or utilities. This allows them to more accurately track
revenue and expenses related to these services and ensure they are managed
efficiently.
 4.3 The Ethiopian State Budget Process

The budget process is guided by a directive (known as the Financial Calandar) issued by Ministry of Finance and Economic
Development (MoFED) to all entities listed as public bodies (see tabel 4.1).
Tabel 4.1 Existing Budget Calendar – The Integrated Planning and Budgeting Cycle
July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July
th
Federal Macro Economic and Fiscal By 10 : By 24 : By 8th:
th
By 22nd: By 2ndJune: th
By 8 :
Framework (MEFF): MEFF. annual public public budget budget approved
1. Economic growth By 25th: 3 fiscal investment bodies completed By 15th:
and GDP year plan program; submit notification of
2. Gov’t revenue, subsidy annual requested approved budget
expenditure and estimates subsidy budget to public bodies
sources to regions. estimates to
3. Allocations to regions;
federal, regions and budget call
councils to public
4. Allocations to capital bodies
and recurrent
Regional 1. Sector planning By 31st: By 31st By 30th By 8th:
2. Macro Economic and Fiscal Framework budget May: June: budget approved
(MEFF) call and final budget By 15th:
3. Fiscal plan pre- ceilings completed notification of
4. Budget strategy paper ceilings and approved subsidy
5. Grant formula update to budget to regions
regional call to
sector sector
bureau bureau
Local 1. Community consultations within initial expenditure By 15th: By 10th By 10th:
ceilings (based on current year’s budget) budget call June: final budget
2. Sector planning and pre- ceilings and completed
3. Fiscal plan ceilings to budget call to By 15th:
4. Budget strategy paper sector sector offices budget approved
offices By 21st:
notification of
approved budget
to public bodies
 Wolaita Sodo University
College Of Business and Economics
Department Of Public Administration and Development Management

Lecture Power Point

Course Name: Public Financial Administration And Budgeting
Academic Year: IV Semester I
Chapter: Four
 Chapter Four
Budget Structures and Practices

• The budget can be structured in many ways based on the

organization’s (or the country’s) standards and method of
budgeting. One of the mostly adopted approaches for structuring
the budget is under two main categories; capital budgeting and
recurrent/operational budgeting.
• A budget practice is a procedure that assists in accomplishing a
principle and element of the budget process.
• Budget practices must be clearly related to activities identified in
the budget process definition.
4.1 The Federal Budget

• The federal budget is the annual statement of the federal government’s

expenditures and revenues.

• It entails/needs the efforts of thousands of staff in the executive and

legislative branches; and the attention of numerous interest groups.

• It involves of decisions, complicated rules and procedures, and debate over

the composition and amount of public revenue and spending.

• The federal budget is a compilation of numbers about the revenues, spending,

and borrowing and debt of the government.

• Revenues come largely from taxes, but some from other sources as well (such
as duties, fines, licenses, and gifts…etc).

• Spending involves such concepts as budget authority, obligations, outlays,

and offsetting collections.
 Conti…

• Budget authority refers to the power to make decisions about how money will be
spent within an organization. This includes creating budgets, approving
expenditures, and monitoring spending to ensure it aligns with organizational goals.

• Obligations refer to the amounts of money and organization is required to pay,

often resulting from previously agreed-upon contracts, loans, or other financial
commitments.

• Outlays are the actual expenses incurred by an individual or organization, which can
include everything from rent and utilities to employee salaries and raw materials
for production.

• Offsetting collections involves moving funds from one account to another to cover
expenses or settle debts, ensuring that all financial transactions are properly
accounted for.
• The federal budget consists of two main groups of funds: federal funds
and trust funds.

• Federal funds which comprise mainly the general fund largely derive
from the general exercise of the taxing power and general borrowing
and for the most part are not earmarked by law to any specific program
or agency.

• One component of federal funds, called special funds, is earmarked as

to source and purpose. The use of federal funds is determined largely
by appropriations acts.

• An appropriations act is a law passed by the legislative body

authorizing the expenditure of public funds for specific purposes.
 Cont…
• Trust funds are established, under the terms of statutes that
designate them as trust funds, to account for funds earmarked by
specific sources and purposes.

• The Social Security funds are the largest of the trust funds;
revenues are collected under a Social Security payroll tax and are
used to pay for Social Security benefits and related purposes.

• The unified budget includes both the federal funds and the trust
funds. The balances in the trust funds are borrowed by the federal
government; they are counted, therefore, in the federal debt.
4.2 State and Local Government Budgets
• State and local governments play an essential role in providing public
goods and services to their residents.

• Local budgets vary significantly due to factors such as historical

traditions, cultural diversity, and different types of governance
structures.

• There's no one-size-fits-all model for local government budgeting.

• However, all effective sub-national budget systems should aim to

achieve three main goals: fiscal discipline and expenditure control,
prioritized resource allocation, and operational efficiency and
effectiveness.
Conti…
• Fiscal discipline and expenditure control refers to the ability of local
governments to manage their finances responsibly and ensure that spending is
kept within reasonable limits.

• Prioritized resource allocation means that resources are distributed according

to the most pressing needs of the community, ensuring that the most critical
areas receive the necessary funding.

• Operational efficiency and effectiveness involves using resources in a way

that maximizes their impact and ensures that services are delivered effectively
and efficiently to meet the needs of the community.

• This means that local governments must ensure they spend their resources
wisely, focus on the most important needs of their community, and use their
resources efficiently to maximize the impact of their spending.
• Prescription for effectiveness include systems and processes that
emphasize
 Transparency in the definition of roles and responsibilities and
decision making
 Comprehensiveness in the incorporation of all revenues and
expenditures and full accounting of all budgetary transactions
 Processes and methods to establish policy and priorities, including an
outward-looking fiscal framework, focus on service outputs and
outcomes
 Expenditure planning based on established priorities, relating spending
to service levels and allowing flexibility in the use of resource inputs
 Accountability and control reinforced by comprehensiveness;
prioritization; and systematic budget and expenditure reviews,
execution controls, and post-execution reporting and auditing
• In many general purposes of local governments, the budget is
composed of three separate, but connected parts: (1) annual operating
budget; (2) capital budget; and (3) the enterprise or utilities budget.

• The annual operating budget lays out the anticipated/expected

spending that will be done by all public agencies during the upcoming
year.

• Example, spending for public safety, planning and development, social

services.

• The annual operating budget also lays out the revenues that are
expected to be received by the local government during the upcoming
year.
• The capital budget represents the portion of a government's budget that is
dedicated to investing in long-term infrastructure projects with a useful life
extending into the future.

• This includes things like building roads, bridges, schools, hospitals, and other
public facilities.

• The capital budget is the outcome of a comprehensive planning process that

involves identifying the needs of the community and determining which
projects will have the greatest impact on improving public services.

• General purpose local governments, such as cities and counties, may also
categorize certain services like water, electricity, or waste management into
separate "enterprises" or utilities. This allows them to more accurately track
revenue and expenses related to these services and ensure they are managed
efficiently.
 4.3 The Ethiopian State Budget Process

The budget process is guided by a directive (known as the Financial Calandar) issued by Ministry of Finance and Economic
Development (MoFED) to all entities listed as public bodies (see tabel 4.1).
Tabel 4.1 Existing Budget Calendar – The Integrated Planning and Budgeting Cycle
July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July
th
Federal Macro Economic and Fiscal By 10 : By 24 : By 8th:
th
By 22nd: By 2ndJune: th
By 8 :
Framework (MEFF): MEFF. annual public public budget budget approved
1. Economic growth By 25th: 3 fiscal investment bodies completed By 15th:
and GDP year plan program; submit notification of
2. Gov’t revenue, subsidy annual requested approved budget
expenditure and estimates subsidy budget to public bodies
sources to regions. estimates to
3. Allocations to regions;
federal, regions and budget call
councils to public
4. Allocations to capital bodies
and recurrent
Regional 1. Sector planning By 31st: By 31st By 30th By 8th:
2. Macro Economic and Fiscal Framework budget May: June: budget approved
(MEFF) call and final budget By 15th:
3. Fiscal plan pre- ceilings completed notification of
4. Budget strategy paper ceilings and approved subsidy
5. Grant formula update to budget to regions
regional call to
sector sector
bureau bureau
Local 1. Community consultations within initial expenditure By 15th: By 10th By 10th:
ceilings (based on current year’s budget) budget call June: final budget
2. Sector planning and pre- ceilings and completed
3. Fiscal plan ceilings to budget call to By 15th:
4. Budget strategy paper sector sector offices budget approved
offices By 21st:
notification of
approved budget
to public bodies
• The existing budget process of Ethiopia falls into four phases:
• The policy planning phase the planning cycle;

 The budgeting phase budget preparation and recommendations

 Budget execution and implementation phase;

 The budget audit and evaluation phase performance review.

I. Planning Cycle
• There are three stages in the Planning Cycle:

 The macro-economic and fiscal framework;

 Notification of the three-year subsidy estimates; and the

 Preparation of the annual fiscal plan.

 .

• Stage 1: The Macro-economic and fiscal framework (MEFF)

• MOFED is responsible for the preparation and maintenance of a

rolling five year Macro Economic and Fiscal Framework (MEFF),
and to have it presented to the Council of Ministers for their
approval.

• The MEFF provides, forecast of economic growth and GDP;

government revenues and expenditures, and sources of financing;
the allocation between federal government expenditures and the
total subsidies to regions and administrative councils and the
allocation between capital and recurrent expenditures for the
federal government.
• Stage 2: Notification of the three-year subsidy estimates

• Using the approved subsidy formula and based on the approved MEFF,
MOFED will prepare a rolling three year estimate of subsidies to each
regional government and administrative council, and notify them of
these estimates by November 25 each year.

• The subsidy formula takes account the following parameters:

 Index of population,

 The level of development- development in areas such as education,

health, road, and access to water.

 Index of revenue generating capacity of each region

 Poverty Index- it measures directly the resource needs of regions to

address such a critical problem in the system
• Stage 3 Preparation of the annual fiscal plan

• The final stage of the planning cycle is the preparation of the

Annual Fiscal Plan by MOFED.

• The Annual Fiscal Plan is a detailed estimate of the revenue,

expenditure (including subsidies) and financing requirements for
the coming fiscal year.

• The Annual Fiscal Plan on the other hand is built from the bottom
up (i.e. from each public body), and is prepared using more recent
data on revenue and expenditure trends and forecasts (i.e. in
January).
The budgeting phase – Budget Preparation and Recommendations

• There are ten major stages in this budgeting phase:

• Stage 1 – Budget preparation by public bodies

• Each public body needs to take the initiative to start budget

preparations before they receive the budget call letter from
MOFED with their budget ceilings.

• There is much preliminary budget preparation work they can carry

out prior to receiving the official budget call letter.

• This preliminary work can be summarized as follows, for federal,

regional and local organizations.
 Cont…

Federal 1. Individual organization’s ARISIP (a) last year’s performance

2. Preliminary budgeting based on last year’s allocation

Regional 1. Integrated GTP (i.e. regional development plan – new or update)

2. Individual organization’s ARISIP (a) last year’s performance
3. Preliminary budgeting based on last year’s allocation

Local 1. Integrated GTP (i.e. local development plan – new or update

1. Individual organization’s ARISIP (a) last year’s performance
2. Preliminary budgeting based on last year’s allocation

Note: ARISIP- Annual Report, Infrastructure and Service Improvement Plan

• Stage 2 – Mid-year program review

• Regular reviews of organizational performance through program

budget are part of normal management practice.

• A mid-year review of program performance should be carried out

by the end of January. The review should be conducted in the
context of the program budget measurement framework; the
economy of inputs, the efficiency of outputs and the effectiveness
of impact.

• Stage 3 – Work plan preparation – redefined as program

construction
• In program budget terms, a work plan is something that is prepared
after the budget is approved.
Cont….
• The work plan therefore takes on two roles. First is project
management when things will be implemented, plus its monthly
expenditure.

• Secondly is the quarterly budget review role, through variance

analysis.

• Program construction

• The core task in budget preparation is program construction. Program

construction concerns both capital and recurrent expenditure.

• Programs specify in detail, the targeted outputs, the activities to

achieve them, and the inputs required.
• Stage 4 – Notification of annual subsidy

• Using the approved subsidy formula, MOFED prepares the budget for the subsidies to
regional governments and administrative councils.

• MoFED will notify each regional government and administrative council of their annual
subsidy by February 8.

• Stage 5 – Issue of the budget call

• The Budget Call is a letter from MoFED sent to all public bodies which provides them with
the following:

 Their ceiling for program expenditure for the coming fiscal year;

 The deadline for submitting their budget request;

 A review of the policies that affect the expenditure of public bodies;

 General guidelines for the preparation of the program budget submission; and

 Detailed instructions and formats for preparing the request for the program budgets.

• MOFED will issue the Budget Call letter to all public bodies by February 8 of each year
• Stage 6 – Budget Requests

• The ‘budget request’ stage of the budget cycle begins when public bodies
receive the Budget Call.

• To “fit” the request, two tasks have to be completed by public bodies:

 Adjust their program budgets to the budget ceiling notified; and

 Complete the necessary forms for submitting their program budget requests
to MOFED.
 Stage 7 - Budget Hearings

• Having received the budget requests from public bodies, and before preparing
a draft recommended budget, MoFED will conduct ‘budget hearings’.

• The information obtained from these budget hearings enables MoFED to

proceed to the preparation of a draft recommended budget.
• Stage 8 - Preparation of the draft recommended budget

• The draft recommended budget is the consolidated budget that MOFED

prepares and submits to the Council of Ministers.

• MoFED prepares the draft recommended budget based on the budget requests
it has received from all of the public bodies, and from up to date information
on resources that will be available to fund expenditures.

• During this stage, the budget requests from public bodies are reviewed, adjusted
and consolidated into a single budget for capital and recurrent expenditure.

• The draft recommended program budget will be finalized by MOFED and

printed from the (revised) computerized budget system.

• MOFED is required to submit its draft recommended budget to the Council of

Ministers by May 23.
• Stage 9 Recommended budget reviewed by council of ministers

• The Council of Ministers receives the draft recommended budget from

MoFED, and carries out its own review of that draft recommended budget.

• The Council of Ministers will carry out its review from the 3rd week of
May to the first week of June (15 days).

• The Council of Ministers may ask MoFED to make adjustments or

revisions to the draft recommended budget before the Council
‘recommends’ it to the House of Peoples’ Representatives.

• The recommended budget must be submitted by the Council of

Ministers to the House of Peoples’ Representatives no later than June 7.
• Stage 10 Legislative approval and appropriation of the budget

• The recommended budget will be presented in a Budget

Speech by the Minister of Finance, to the House of
Peoples’ Representatives (HPR), on a designated date.
•

• The House of Peoples’ Representatives is required to

vote on the annual appropriations for the approved
budget no later than July 7. The
 ‘

• The approved budget and the annual appropriations can

now be referred to as the Proclaimed Budget, and is
published in the Negarit Gazeta – ready for
implementation.

• Copies are distributed to all public bodies and made

available of the MoFED website.
III. Budget Execution and Implementation
• After the House of Peoples’ Representatives has approved the
budget, it is the responsibility of the public bodies to implement that
budget. Implementation of the approved budget is known as budget
execution.

1. Budget notification

• It is the responsibility of MoFED to inform all public bodies

of their approved budget. MOFED will notify public bodies
of their approved budgets between July 8–15.
2. Receipt of approved budget and changes to plans by public bodies

• After each public body has received notification of its approved budget
from MoFED, there are two tasks to be completed to implement its budget.

• First each public body’s head will amend his / her ARISIP (annual report,
infrastructure and improvement plan) to reflect the approved budget.

• The ARISIP will then be available to the public. This represents the
finalization of the de facto/actual performance agreement between the
public body’s head and MoFED.

• Secondly, each public body will submit its annual work plan to MoFED.
This establishes the monthly expenditure predictions for each output within
each program.
3. Budget execution and implementation
• The approved budget is implemented by public bodies over the
course of the financial year, (i.e. from July 8 to July 7 of the next
calendar year).

• An approved budget that has been published in the Negarit Gazeta

and allocated by MoFED is the legal authority to spend
government funds.
4. Unforeseen circumstances

• Not all future circumstances can be foreseen with accuracy. There

are two types of budget adjustments permitted by law. These are:
• Budget transfer - moving budgeted funds between public bodies,
budget institutions, programs, without changing the total approved
budget.

• Supplementary budget- During a budget year, while an approved

budget is in the process of being implemented, it is possible that:

 An unforeseen or urgent need for increased expenditures arises,

(e.g. a natural disaster);

 A new project, not included in the original approved budget, is

approved for commencement during the budget year

 Additional resources become available (e.g. from external

assistance or loans) that can fund increased total expenditures,
including any new projects.
5. Adjusted Budget
• The adjusted budget is the budget that includes:

 The original approved budget,

 All approved budget transfers, and

 All approved supplementary budgets.

• All transfers and supplements must be approved prior to

being recorded in the register specified by MoFED, i.e.
the budget expenditure subsidiary ledger card.
 .

6. Delays in budget approval

• In rare circumstances it is possible that the preparation of a budget and

approval of a budget by the House of Peoples’ Representatives may be
delayed and not be ready in time for the commencement/begnning of
the new fiscal year.

• In these circumstances the Financial Proclamation of 2009 authorizes

MoFED to implement the same recurrent budget as the previous
financial year on a monthly basis until a new budget is approved.

• Similarly, MoFED is authorized to release funds for previously

approved capital projects until a new capital budget is approved.
 IV. Budget Audit and Evaluation
• This stage deals with performance review. According to Endawke T.
(2009) the budget evaluation of Ethiopia begins at the institutional
level by the internal auditor.

• The finance laws require the internal auditor to produce a monthly

report stating the monthly revenue and expenditure of the institution
and this report is sent to the finance office of the level of
administration.

• The state governments are also required to report to the Ministry of

Finance corresponding to the financial reporting system of the
federal government.
• The federal government, through the Ministry of Finance and the
Auditor General, also has the power to conduct an audit of the
federal offices as well as the state governments concerning the use
of subsidy grants they have received from the federal government.

• Budget evaluation at the regional level has to be done formally

every quarter on the basis of the activity reports submitted by each
sector bureau.

• All state government institutions have to be audited by internal and

external auditors.
4.4 Local Government Budget Processes in Ethiopia

• Ethiopia is a Federal State and the Constitution of 1994

mandates a federal structure with considerable
autonomy to the regions in administrative and fiscal
matters.

• At a lower level there are woreda (or district) Sub-

National (SN) administrations. Basic service delivery
relating to health and primary education is delivered by
woredas.
• The regions’ budget planning processes start by
estimating the budget sources.

• The budget estimates made by Regional Bureaus of

Finance and Economic Development (BOFED) of the
available sources of own revenue and the amount
resource coming from the federal block grant.

• These estimates are usually based on the regions’ three-

or five-year plans and on the Federal Government’s three
year estimates of the subsidy.
• The Regional budget calls is issued and sent to sector
offices and Woreda office; Finance and Economic
Development between January and May. ‘

• Regional Bureaus of Finance and Economic

Development (BOFED) prepares two indicative budget
figures; one for the sector bureaus at regional level and
one for the Woredas and urban administrations.
• After getting the actual amount of federal Block Grant,
BOFEDs allocates budget to regional sector offices and
Woredas.

• Allocation to sector offices is based on (a) last year

expenditure, and (b) new recurrent activities and capital
projects.

• Allocation for Woredas is based on the regional transfer

formula. Regions allocate more than 2/3rd of their budget
shares to Woredas administrations.
•
• The annual budget process at regional level has to go through the
following six basic stages for the cycle to be complete:

• Budget Preparation; BOFED estimates physical resources

available: federal subsidy, and own revenue.

• Regional bureaus, zonal offices, Woredas and urban administrations

submit draft budget plans to BOFED, with careful distinctions made
between recurrent and capital budgets.

• Review; BOFED reviews the draft budget and then passes to the
Regional Cabinet for endorsement/authorization.

• Approval; The Regional Cabinet discusses and endorses the budget

and transfer formula.
• The endorsed budget is then presented to the Regional Council (elected
representatives of citizens from Woredas and urban administrations) for
appropriation and allocations to sector bureaus, zonal offices, Woredas and urban
administrations.

• Appropriation; After approved budgets have been determined and adjusted,

allocations are made. BOFED notifies each sector office of its respective
budget. After receiving the Budget Notification, sector bureaus, Woredas and
urban administrations are supposed to finalize their budgets within approximately
one month’s time by making minor adjustments on their programs within the limit
of their budget.

• Expenditure; Budget implementation by different bureaus, offices, Woredas and

urban administrations takes place and detailed records are kept.

• Auditing; Regional BOFED auditors reconcile expenditures with approved

 .

Thank you!!!