An Analysis of the Prospects and Possible Challenges of Transition from Line Item to Program Budgeting Approach in Federal Democratic Republic of Ethiopia.
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Date
2011-02
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Addis Ababa University
Abstract
Identifying the importance of PB manner the government of Ethiopia has decided to replace
the existing traditional line item budgeting approach by program budgeting. It has been
argued in this thesis that the government of Ethiopia has made some good progress in
introducing PB. It has been successful in initiating the shift in mindset of public servants and
in instilling a performance culture in the public sector. The thesis uses in-depth interviews
with the budget reform team members, questionnaires to budget experts in public bodies,
discussions in training sessions and secondary data which are analysed qualitatively by
categorising into themes. According to the finding the shift to PB was necessary to be more
result oriented and responsive. All the formats are completed and trainings are given, public
bodies are expected to prepare for the coming budget year, but there are a lot of challenges
faced which are among others: low capacity of both MoFED to control and follow up and
ministries to undertake the reforms genuinely and uniformly, methodological problems like
complexity, agreements in terminologies, variations in understanding of objectives,
programs, results/outputs, difficulties in costing methods and measuring outcomes, lack of
attention and commitment of top level officials and also all staffs of the ministries. Finally
based on the findings of the study, it is recommended that MoFED has to strengthen its
capacity, keep the framework simple, ensure a genuine participation and ownership, design
flexible and effective costing method and communicate it effectively in a gradual step by step
approach to bring out the change. Therefore, it is recommended to delay the implementation
of PB to the next fiscal year
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Republic of ethiopia