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House of Federation looking into request for budget formula restructuring

Heads of the Tigray Interim Administration (TIA) have called on Parliament to facilitate the recovery of nearly 20 billion birr in undisbursed budgetary funding withheld over a 17-month period during the northern war.

The budget was among a range of issues raised by TIA officials during discussions with lawmakers and the Ministry of Finance on June 26, 2024.

“Tigray has no representatives in federal institutions, including the two houses of Parliament. Therefore, we haven’t been able to make our voices heard in any of the decisions being made regarding Tigray,” said Desta Bezabih, a TIA representative.

The Ministry of Finance earmarked 13 billion birr for the Tigray region in the 2024/25 budget proposal tabled to Parliament last week. Representatives from the regional state, however, contend the figure is not nearly enough.

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Some 130,000 civil servants in Tigray have gone without pay for the last year and a half, according to the TIA, which estimates the pay backlog to equal 1.2 billion birr a month, or more than 20 billion birr in total.

As all capital projects and government activity have ceased in Tigray since the war, civil servants have had no choice but to sit idle and wait for pay, according to TIA representatives. They lay the blame on the federal government for refusing to disburse budgets meant for Tigray.

The Reporter has previously covered the cutoff of budgetary disbursals to Tigray based on a letter from the House of Federation, which contended that Tigray was not a member of the Federation during the two-year conflict.

“When we requested the federal government to disburse the war time budget for Tigray, it introduced a new law that prevented us from placing such requests. The federal government said the case could only be solved through the constitution. We are currently in court proceedings at the Constitutional Inquiry Commission,” said Desta.

However, the drawn out proceedings have forced the TIA to request parliamentary intervention.

Lawmakers did not make any comments on the TIA request during a session held on Wednesday.

Meanwhile, Getachew Reda, president of the interim administration, has moved to bar petitions for unpaid salaries following public demonstrations by unpaid workers in Tigray and mounting pressure on the TIA.

A letter signed by Getachew authorizes the extension of a six-month embargo on salary claims, imposing it for another six months. The extension is a bid to find a solution to the financial crisis gripping the war-torn region. The letter mentioned that the ban on court proceedings regarding salary claims was requested by the regional bureaus of Industry and Finance.

TIA officials have also asked lawmakers to revise the federal subsidy budget allocation formula for regional states.

“We’ve already tabled our request to the Ministry of Finance officially. However, we are not sure who would make the decision to restructure the formula ratio,” said Desta.

The House of Federation calculates federal subsidies to regional administration based on population, revenue potential, and development needs. The federal government and regional states share revenues based on a certain ratio portioning as part of a procedure introduced a few years ago.

“Tigray is not the same as it was four years ago. Therefore, the federal government cannot use the regular budget formula for today’s Tigray. Today, the TIA is governing a region that has no revenues. Four years ago, Tigray achieved all its SDG targets. Today, all of them are at zero. How can these targets be achieved with normal-time intervention? The baseline for everything in Tigray is reversed and has to resume from scratch. The budget allocation formula for Tigray must also be restructured,” said Desta.

Eyob Tekalign (PhD), a state minister of Finance, commented on the request.

“In addition to Tigray, other regions have also requested for the restructuring of the budget formula. We know the existing formula is old. So it needs change. The House of Federation, as well as the standing committee for Budget, Finance and Planning are discussing the possibilities for restructuring the formula. It can only be revised by the House of Federation. The Finance Ministry’s mandate is to allocate budgets to regions based on directions from the House of Federation,” said Eyob.

TIA officials told MPs that inflation continues to pose a challenge in Tigray.

“People are migrating to look for work. The federal government must resume its projects [in Tigray],” said a TIA representative.

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