Ethiopia’s Federal Auditor reports huge mishandling of budget

May 25th, 2009 | EthioPolitics.com |

Capital

The Federal General Auditor has once again reported to parliament that a number of federal executive organs are mishandling their budgets. The report detailed that the education and defense ministries, Police University College, and Federal Supreme Court are among federal organs that failed to follow legal procedures.

For instance, when audited, the Defense Ministry’s Logistic Department accounts between the years 2000/01-2003/4 were found to have 216, 697 birr unaccounted for.

The Federal Auditor also scrutinized to see if the federal organs were settling their accounts on time and in the manner stated by the regulation of Council of Ministers. The findings are hardly encouraging: there is an overall 54.5 million birr - almost 10 per cent of this year’s Federal Government budget - of spending that was not recorded according to the correct procedure.

The Education Ministry takes the biggest blame by not recording properly 43.2 million birr, while the Defense Ministry didn’t account adequately for 2.8 million.

The Education Ministry is yet to find the details of the audited account, the Federal Auditor’s Report explained. Such misconducts, the auditor warns, will not only harm the activities of the institution themselves, but also opens the doors for the abuse of public funds.

Collection activities by the federal organs also showed a slight shortfall: around 1.75 million birr which should have been collected by 12 federal organs was not collected. Also, for 465, 294 birr collected, no receipts was issued.

Last Tuesday’s Federal Audit report presented before parliament didn’t cause the same tensions as it did the last year. Last year, the Government was accused by the auditor of borrowing billions more than it should of by law. The dispute reached its peak when opposition figures repeatedly used the findings to hammer the Government’s performance and question the Government’s and the national bank’s discipline.

Prime Minister Meles Zenawi called the report “a junior accountant’s error” and pushed parliament to set up a team composed of five prominent professionals to investigate the claim. The composition of the committee was challenged by the opposition, which saw the move as second guessing the federal auditor.

However, the final report of the experts’ committee agreed with the federal auditor - but also with the Federal Government. Both were found to have followed the correct procedures.

The financial and bank law contains ambiguous articles, as the experts’ committee explained, it could not decide whether loans meant on a net basis, as the Government claimed, or only the total of loans received through bonds, bills and in direct advance as the general auditor interpreted.

This, the experts said, made it impossible for them to distinguish if the Government’s borrowing was lawful or not. However, the latest endorsed revision of National Bank Activities Bill put a stop to such arguments: now the Government and the national bank [accountable to the Prime Minister] independently negotiate to determine how much the Government can borrow.