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The Finance and Economic Development Bureau of the
Addis Abeba Caretaker Administration has set a
budget ceiling for the 2008/2009 fiscal year that is
almost half of last year’s city budget, sources
disclosed. Officials of the Bureau informed heads of
the 61 agencies in the city administration that the
maximum capital and recurrent budget allocated would
be 3.9 billion Br.
This is due to the fact that the revenue the
Caretaker Administration had hoped to collect in the
last two years from land transfers and housing sales
did not meet the mark, disclosed officials at the
City Administration. Hence, the city’s revenue was
not as high as initially expected.
This budget proposal is under preparation by the
Bureau at a time when the Caretaker Administration,
under the leadership of Brehane Deressa, is on its
way out, to be replaced by a new administrative team
nearly all composed of council-elects from the
ruling party. It is not clear whether or not the new
administration will prepare its own budget or
approve the proposal on the shelf; leaders of the
ruling party declined to comment suggesting that it
would be too premature to do so.
Nevertheless, the Finance Bureau has advised
Agencies’ Heads under the city to limit their
requests based on the formula it had sent to them
disclosing the maximum budget they could request.
This has not pleased many of the agencies.
For instance, the Addis Abeba Investment Authority
requested 713,186 Br for the next budget year,
although it was informed that the highest it could
go is 687,000 Br.
The Authority wants such an amount to cover its
recurrent expenditure, including salaries for its 20
staffs, according to an official in the Authority,
who requested to remain anonymous.
“The Bureau developed the formula without
considering the new employees we have hired
recently,” the official told Fortune.
A 6.5 billion Br budget was approved by the City
Cabinet for this fiscal year, of which 4.9 billion
Br was capital budget, while the balance was to
cover recurrent budget. From the recurrent budget,
60pc was meant to pay operation costs, while the
remaining amount was reserved for salaries.
In the 2006/2007 budget year, out of the 5.6 billion
Br city budget, 3.6 billion Br was allocated for
capital projects; 312.2 million Br for potable water
projects, 1.1 billion Br for road construction and
1.7 billion Br for housing development.
There are capital projects that will enjoy a lower
budget next year from that of last year.
For the housing development project, which envisages
constructing over 40,000 houses, only 1.5 billion Br
is to be allocated. The upper limit budget for the
Addis Abeba City Roads Authority has been set at
951.07 million Br, of which 903 million Br is for
capital projects. A 488.5 million Br is budgeted for
the Addis Abeba Water and Sewerage Authority; 336.8
million Br is for capital projects.
The city’s Finance Bureau has calculated the city’s
budget needs for the coming three years based on the
expenditure and revenues record of the city in the
last two years.
The income from housing was low as the city could
not sell the number of houses it had anticipated
selling due to price hikes in construction
materials, which left some of the constructions
curtailed. This is what compelled the Caretaker
Administration to be realistic this time in its
budget formula.
According to an official at the city’s Finance
Bureau, the current expenditure needs of the city is
10 billion Br, which is one fourth of the national
budget; the total revenue is collected in the form
of taxation.
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