Fiscal Decentralization and Macroeconomic Management in Ethiopia

"This paper attempts to evaluate the recent moves to decentralize fiscal powers to the regions to see to what extent they can affect the conditions for macroeconomic management in the country, given the ongoing economic reform programme that emphasises the correction of past macroeconomic mismanagement as the basis for stabilization and growth. The focus is on how central government control of the policy variables can be affected by the proposed changes in fiscal management. The rest of the paper is organized as follows. The first section attempts to develop a theoretical framework for analysis. This is followed in section two by a brief discussion of the Ethiopian institutional setting and the proposed changes in section two. Section three uses the framework to evaluate the proposed system. The final section presents a summary of the paper and some recommendations."