Ethiopia Tigray Region 2019

  1. The objective of the Public Expenditure and Financial Accountability (PEFA) assessment is to review the current performance of the public financial management (PFM) systems, processes, and institutions of the Tigray regional government since the last assessment in 2015. The assessment is aimed at assisting the government in identifying PFM weaknesses that may inhibit effective delivery of services to its citizens and the realization of its development objectives in general. Furthermore, the findings of the PEFA assessment will assist the government in developing a PFM reform strategy and provide the basis for a coherent PFM reform program that can be supported by development partners (DPs), as well as through the government’s own initiatives.
  2. The assessment covers the Tigray Region, which is separate and independent from the federal government and qualifies as a subnational government in the PEFA methodology context. The Tigray regional assessment covered regional government budgeted units, extra budgetary units, the Office of the Regional Auditor General (ORAG), regional council, Tigray Chamber of Commerce, and public enterprises. The list of stakeholders met is presented in Annex 3B.
  3. The fiscal years for the assessments are Ethiopian Calendar (EC) 2008, 2009, 2010 (Gregorian Calendar [GC] FY2015/2016, 2016/2017, and 2017/2018). The period covered for each of the 94 dimensions (summarized into 31 performance indicators [PIs]) depends on the dimension and is in accordance with the PEFA measurement framework. Some dimensions were assessed at the time of assessment (April 25, 2019, was the cut-off date). Other dimensions were assessed at the relevant time period, which is the last completed fiscal year, FY2017/2018, or FY2018/2019 for the last budget submitted to the parliament.
  4. The assessment management framework, oversight, and quality assurance are summarized in Box 1.1. The assessment was funded by the World Bank, Irish Aid, the U.K. Department for International Development (DFID), the European Union (EU), the United Nations Children’s Fund (UNICEF), and the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women). It was managed by the World Bank.

Impact of PFM systems on the main budgetary and fiscal outcomes

Aggregate fiscal discipline

  1. The aggregate expenditure of the Regional Government of Tigray for the last three completed fiscal years was not reliable. The expenditure budget outturn was between 105 percent and 119 percent of the approved aggregate budgeted expenditure in all three last fiscal years. Variance in expenditure composition by administrative classification was 11 percent, 9 percent, and 16 percent in EFY 2008, 2009, and 2010, respectively. In all the past three completed fiscal years, actual expenditure charged to the contingency vote was 0 percent.
  2. Variation in the budget composition indicates inability to spend the budget according to the plan (originally approved budget). The same is true for revenue, as revenue outturn was not close to the budgeted figures in all three years. It was 111 percent, 113 percent, and 107 percent in EFY 2008, 2009, and 2010, respectively. The variance in revenue composition was more than 15 percent in all the last three years. The level of the stock of arrears is not a cause for concern, as it was less than 1 percent of total expenditure on average for the three years of assessment. Although there are no off-budget operations (PI-6), the fiscal risks are not monitored (PI-10) by the regional government. There is no debt management strategy.
  3. The total amount of revenue arrears is limited (PI-19). The actual stock of revenue arrears for the year-end EFY 2010 is about 1.3 percent and the revenue arrears older than 12 months were less than 44 percent. Internal controls of the system concerned with budget execution (PI-23 and PI-25) are well functioning, even though they are not using the best practices of risk-based internal audit. The procurement domain (PI-24) performs very poorly. Overall, the performance of the indicators relevant to aggregate fiscal discipline does not contribute to its attainment.

Strategic allocation of resources

  1. Three of the four indicators concerned with policy-based fiscal strategy and budgeting (PI-14, PI-16, PI-17, PI-18, and PI-15) did not receive good overall ratings, which demonstrates that the process to allocate budgetary resources is not in accordance with the regional government’s strategic objectives.
  2. Although the Regional Planning Commission prepares a Macroeconomic and Fiscal Framework (MEFF), which is developed for the budget year and two outer years, the budget does not have a medium-term focus (PI-16). The quality of the budget preparation process is impaired by the fact that the Cabinet only approves the budget allocations at the end of the preparation process and by the late submission of the draft budget to the regional council. Budget scrutiny (PI-18) performs fairly. It covers fiscal policy and aggregate for the coming year as well as details of expenditure and revenue. The procedures for budget scrutiny are approved before the budget hearings but do not include arrangements for public consultation, technical support, or negotiation procedures. The regional council has approved the annual budget rather late, within one month of the start of the fiscal year in each of the last three fiscal years.
  3. Other indicators such as budget classification, which meets international standards that contribute to the strategic allocation of resources function, are relatively better though with certain weaknesses. The indicators related to revenue collection and administration (PI 19 and PI-20) perform well. That said, the exhaustiveness of budget documentation (PI-5) is extremely poor, as it fulfils only one additional element required by the PEFA Framework. Moreover, regarding public investment management (PI-11), project selection for inclusion into the annual budget is largely based on regional government priorities and not based much on the results of the feasibility studies conducted.

Efficient use of resources for service delivery

  1. The use of resources for service delivery is not particularly efficient. This is demonstrated by the low scoring for the processes that plan services in public investment management (PI-11) and medium-term expenditure budgeting (PI-16), as well as a budget preparation process (PI-17) providing ceilings for budget estimates to the budget entities. The system of allocating transfers (PI-7) is good and determined by a transparent and rule-based transfer system.
  2. Overall, the performance information for service delivery (PI-8) presents a mixed record. Performance plans for service delivery with objectives, key performance indicators (KPIs), and outcomes are published annually but produced for only some sectors. There are evaluations (not published) on the effectiveness of service delivery every two years covering a very few sectors. Public asset management (PI-12) is also rated weak (D+), which entails that there is too little transparency on what is effectively maintained by the Regional Government of Tigray.
  3. Nevertheless, the mechanisms in place to reduce possible leakages in the system, such as internal controls on expenditure (PI-23 and PI-25), are good. The internal audit (PI-26) and external audit function (PI-30) are however weak and need improvement. Financial data integrity does not demonstrate good accounting controls (PI 27), and the public procurement function is still in the process of development and not transparent enough (PI-24). The oversight arrangements for legislative scrutiny of audit reports (PI-31) are effective. The Budget and Audit Affairs Standing Committee (BAASC) conducts hearings in the presence of the executive of the audited officers and directly issues recommendations to each audited entity. Recommendations and hearings are accessible to the public.

Performance changes since last assessment

  1. On the basis of the 2011 method, between the 2014 and the 2019 assessments, performance is largely unchanged. Most or 46 percent of PIs (13 out of 28, as the donor practices indicators have not been assessed) show no change in performance. There is a slight improvement in overall performance of PFM systems as 10 indicators, or 32 percent, have improved in performance and 6 indicators, or 21 percent, have deteriorated. One PI is not comparable. This is shown in Table 0.1, and Annex 4 gives the details of performance change for each PI and dimension.

Table 0.1: Changes in the scores since 2015 using the 2011 framework

Deteriorations in performance

No change

Improvements in performance

Not comparable









PI-1, PI-3, PI-9, PI-11, PI-19, PI-20


HLG-1, PI-4, PI-5, PI-6, PI-7, PI-8, PI-10, PI-18, PI-21, PI-23, PI-24, PI-26, PI-27


PI-2, PI-12, PI-13, PI-14, PI-15, PI-16,  PI-22, PI-25, PI-28




Aggregate fiscal discipline

  1. Aggregate fiscal discipline has not improved as the budget credibility indicators PI-1 and PI-3 deteriorated. The stock of arrears (PI-22.1) is low in both PEFA assessments.

Strategic resource allocation

  1. The strategic allocation of resources has improved slightly owing to the development of an MEFF with forecasts of fiscal aggregates. There is no change in the transparency of intergovernmental fiscal relations. The horizontal allocation of lower government levels is executed as planned.

Efficient use of resources for service delivery

  1. The performance of public services is not better managed, monitored, and controlled than during the previous assessment. Performance under the availability of information on resources received by service delivery units (PI-23), though good, is unchanged. Procurement (PI-19), which displays poor performance, has slightly deteriorated due to lack of information on procurement methods used.

Prospects for reform planning and implementation

  1. The regional government's PFM reform initiatives over the years have largely been based on the federal government's overall reform program. Currently, there are no ongoing PFM reform activities, except for the usual and continuous training and capacity-building programs on internal audit and controls, procurement, asset management, treasury management, and accounting and reporting across all regional sectors and woredas.