WASHINGTON, February 26, 2016 - The World Bank Group Board of Executive Directors today approved a US$ 33 million International Development Association (IDA)* credit to the Government of Ethiopia (GoE) in support of its efforts to improve and modernize its public expenditure management systems.
“Recognizing the necessity of an efficient public expenditure management system to a country’s development, GoE has already introduced a reform program to improve its ability to manage and control its large scale public expenditures,” said Carolyn Turk, Country Director for Ethiopia. “The Public Financial Management Project would help improve the efficacy of the country’s existing expenditure management systems at all levels of government.” she added.
The project will help Ethiopia to further reduce extreme poverty and promote shared prosperity by strengthening the effectiveness of internal control systems to ensure proper expenditure management. By streamlining and automating financial management systems, the project will particularly improve budget planning and execution, payroll processing and financial reporting.
The project will also improve the regulatory and institutional framework for procurement which is a major part of public expenditure. In addition to introducing a certification program for procurement staff, the project will assist GoE to enhance the capacity of federal and regional procurement regulatory bodies in market research, data collection and performance monitoring.
“Supporting these important reforms of financial management and procurement will result in significant cost savings for the country by standardizing procedures and reducing processing time.” said Eric Brintet, World Bank Task Team Leader for the project.
In addition, the project will build the capacity of audit and oversight institutions which are identified as one of the weakest links in the Public Financial Management chain in Ethiopia. The project will also help introduce international standards in accounting, auditing, and bookkeeping as well as supporting the new professional body for accountants and auditors.
The project will be implemented by Ministry of Finance and Economic Cooperation.
*The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $19 billion over the last three years, with about 50 percent going to Africa.