State of Fiscal Decentralization in Ethiopia: Successes and Contests

Abstract: This study aims to evaluate Ethiopia’s thirty years fiscal decentralization practices using four key indicators: revenue decentralization, expenditure assignments, federal grants, and subnational governments' access to financial resources. The results show that most revenue and expenditure fiscal assignments are highly centralized. The federal government is using grants to achieve its political objectives. Sub-national governments have limited access to financial markets, both international borrowing and domestic financial resources. The study concludes that Ethiopia's fiscal decentralization practice is highly centralized, not decentralized, and needs serious policy amendments to boost country’s future development arena. Keywords: Fiscal Decentralization, Sub-National Government, Autonomy JEL Classification Number: H70