Ethiopian Review

Addis Ababa, Ethiopia — Addis Ababa City will see its budget for the coming fiscal year slashed by 2.1 billion birr.

Contrary to the trend on the federal level and its own record of the past four years, the Addis Abeba City Council may have to vote on a new budget bill that is substantially lower from the budget of the current fiscal year, reliable sources disclosed.

The proposed budget for the fiscal year 2009/10 could be 6.6 billion Br, according to a preliminary document, prepared by officials at the city’s Finance and Economic Development Bureau. About 70pc (4.62 billion Br) of the proposed budget is to cover capital expenditure, while the balance goes to recurrent budget, an amount allotted to pay overhead costs and salaries.

Despite the decrease in the total budget, once again, the three major infrastructure and housing development agencies – the Housing Development Project Office, the Addis Abeba Water and Sewerage Authority (AAWSA) and the Addis Abeba City Roads Authority (AACRA) – may share the bigger chunk of the budget, sources disclosed.

These top three priorities are followed by public spending on micro and small scale enterprises expansion, capacity building works, health services, education (especially Technical and Vocational Education and Training), solid waste disposal services and the construction of youth centres.

The Addis Abeba City Cabinet, chaired by Mayor Kuma Demekssa, is expected to deliberate on the proposed budget next week, according to these sources. The City Cabinet will decide whether to send it to the City Council or back to the Bureau for a revision, sources at the Bureau disclosed. The proposed budget, which has shown a 2.1 billion Br decrease from the just ending fiscal year, is also expected to be presented to the City Administration Council within a month.

“We will announce the details and distribution of the budget among the agencies after it is approved by the Cabinet,” Foano Fola, deputy Bureau head for the Economic Development Division of the Finance and Economic Development Bureau, told Fortune.

The City’s budget had grown significantly over the past four consecutive years. Compared to the 80 million Br budget it had during the early 1990s, its budget over the past few years has expanded exponentially. For instance, in the 2005/06 budget year, more than a decade after the Ethiopian Peoples Revolutionary Democratic Front (EPRDF) took power, the city had a four billion Birr budget. This amount increased to 5.1 billion Br the following year. Even during the Caretaker Administration of Brehane Deressa, in 2007/08, its cabinet had approved a budget of 6.5 billion Br. It grew significantly, exceeding that of 2006/07 fiscal year by 1.4 billion Br. This was attributed largely to the expansion in capital expenditure, from 3.6 billion Br in 2006/07 to 4.8 billion Br the following year.

Although the administration of Mayor Brehane had approved the largest budget in the city’s history, for two consecutive years, the city had suffered a budget deficit amounting to 2.5 billion Br. It had failed to collect the revenue according to its target.

In yet another round of increases, the current administration of the city raised the 3.9 billion Br budget its predecessor had proposed for the current fiscal year to 8.7 billion Br. The current council will oversee the decision of the City Cabinet for only the second time since the Revolutionary Democrats have come to the city government. With some of its agencies such as AACRA and the Housing Development Office still expecting more budget than their limits, the City Cabinet will have to decide how to accommodate the interests of its agencies within the limits of the city’s resources.

The Bureau has also set a cap on each agency’s budget request.

“Budget is a reflection of the city government’s priority,” Foano told Fortune. “The three top priorities are chosen because they are key elements whose development help the city attain a middle income status.”

For instance, the upper limit for the Housing Development, which will enjoy for the second time the highest budget, is 1.2 billion Br. However, the Office has requested more than the limit, according to a source in the Office.

“But we still have to discuss our requests with the City Cabinet as part of the discussion on the preliminary budget document,” an official in the office told Fortune. “Considering that we will be generating revenue and the importance of the projects and the emphasis the administration attaches to it, we will expect more.”

This official is referring to the discussion the office plans to have, probably on Monday, before the Cabinet approves the budget proposal in the following few days.

His office is not alone. AACRA’s officials say, without specifying the amount they requested, that the upper limit the Bureau has imposed is lower than the amount they have requested for the Authority’s operations during the next fiscal year. The Authority plans the construction of approximately eight roads transferred from the current fiscal year. The face-lift work on the road running from Meskel Square to the Bridge on the Bole Airport section of the Ring Road is major.

- By HILINA ALEMU | Addis Fortune