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toFo/raA ";J /,:,. ;J It ff)FEDERAL NEGARIT GAZETA

OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

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CONTENTS"

Council of Iv'.inistersR6g11lat16n!f 111".17/1997Council'of Ministers Financi,,!Regulations Page 544

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COUNCIL OF MINISTERS REGULATIONS No. 1711997 ,

COUNCIL OF MINISTERS REGULATIONSON THE FINANCIAL

ADMINISTRA110N OF THE FEDERAL GOVERNMENTThese Regulations are issued by the Council of Ministerspursuant to Article 5 of the Definition of Powers and Dutiesof the Executive Organs of the Federal Democratic Republicof Ethiopia Proclamation No. 4/1995, and Article 68 of theFederal Government of Ethiopia Financial AdministrationProclamation No. 57/1997.

PART ONEGeneral

1. Short titleThese Regulations may be cited as the "Council ofMinisters Financial Regulations No.17 /1997."

2. DefinitionsIn these Regulations:1) "Advance" means a payment for which there is no

exchange of value and that is to be accounted forby the recipient at some later date and does notinclude a progress payment made on accountof,but before the completion of a contract.

2) "Bid security" means a bid bond or securitydeposit given by a contractor to the FederalGovernment of Ethiopia to guarantee entry into acontract if the contract is awarded to that contract-or.

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3. "Capital Expenditure" means:(a) the acquisition, reclamation, enhancement or

laying out of land exclusive of roads, buil-dings or other structures;

(b) The acquisition, construction, preparation,enhancement or replacement of roads, buil-dings and other structures;

(c) the acquisition, installation or replacement ofmovable or immovable plant, machinery andapparatus, vehicles and vessels;

(d) the making of advances, grants or otherfinancial assistance to any person towardsexpenditure incurred or to be incurred byhimlher on the matters mentioned Inparagraphs (a) to (c) above or In theacquisition of investments; and

(e) the acquisition of share capital or loan capitalin any body corporate.

(t) Any associated consultancy costs of theabove.

4) "Contract" includes:(a) a construction contract;(b) a goods contract;(c) a service contract~ or(d) a leaseentered into on behalf of the Federal Governmentof Ethiopia by a public body.

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on behalf of a contractor to the FederalGovernment of Ethiopia to make good onany default by the contractor under thecontract by:(i) compensating the Federal Government

of Ethiopia therefore, or(ii) completing the performance of the con-

tract to the extent required by the termsand conditions of the payment bond orperformance bond, or

(b) a security deposit given by the contractor tothe Federal Government of Ethiopia tosecure the performance of the contract to theextent required by the terms and conditionsof the contract.

6) "Custodial Responsibility", means the respon-sibility conferred on a government employee bythe head of a public body or his or her delegatedmanager to protect and maintain public property,until either its disposal or deletion or its transfer tothe custody of another employee or organization.This reponsibility may also include the recordkeeping required under the directi ves of the Minis-ter of Finance;

7) "Debt assignment" means the transfer of theresponsibility for a debt from one person, or-ganization or country to another. It may refer to atransfer from one debtor to another or one creditorto another;

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8) "Deletion" means the removal ~f public property and

its value from the records;

9) "Disposal" means the sale or transfer of public

property to another party or scrap of public property;

10) "Emergency" means an unforeseen combinfjtion of

circumstances or the resulting state that calls forimmediate action;

11) "Fees and Charges" means a payment made by users

to public bodies for the supply of goods, rendering ofserVices and use of facilities; and does not includefines and penalties;

12) "Fixed Asset" means tangibl~ asset costing Birr 200

or more that is in operational use and that has a usefuleconomic life of more than one year, such asfurniture, .computers, heavy equipment, vehicles, ships andaircraft, buildings, roads, sewers, bridges, irrigationsystems, dam;

13) "Fiscal Plan" includes:

(a) Revenue forecasts at existing rates of

trocationconsistent with the macroeconomicaSsumptions;

(b) Forecast of non-tax revenues (surplus of

public enterprises, fees, user charges, etc.)based on macroeconomic projections butwithout any changes in policy;

(c) Estimation of additional revenues which

may be mobilized by, for example, higher

tax rates, a different tax structure, or ins-

titutional and administrative reforms in taxcollection;

(d) Estimation for additional income resulting

from changes in the policy framework forpublic enterprises, public sector priCingpolicy charges in the social sectors, etc;

(e) Estimates of resources available from

domes,tic and external borrowing and grants.

(f) Projections df current development expen-

diture.

14) "Internal Audit' ' means a systematic, independentand appraisal of all operations, including adminis-trative activities, for purposes of advisingmanagement practices and controls;

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Federal Negarit Gazeta - No. 46 1iii July 1997 - Page 547

15} Internal Control' ' means the plan of organization andall the coordinated method,sandmeasures adopted bymanagement to safegu¥d asset, ensure the timeliness,accuracy and reliabilitY of accounting data, promoteoperational efficiency and maintain adherence toregulations and directives;

/6) ''LifeLTime ApproachH means the effectivemanagement and control of public property by takinginto account all associated activities and costs.namely, planning, acquis~on, receipt, use, maintenan-ce, consumption or disposal or deletion of publicproperty;

'/7) ~'Negotiable security" means a financial instrumentwhich is transferable from one person to another bybeing delivered with or without endorsement so thatthe title passes to the transferee;

/8) "Progresspaymeot' 'means a payment made by or onbehalf of the Federal Governemnt of Ethiopia underthe terms of a contract after $e performance of thepart of the contract in respect of which the payment ismade but before the performance of the wholecontract;

/9) "Retention" means'a portion of the progress billingscalled for under the terms of a contract that is notpayable to the contractor until the contract has beencompleted and .all subcontractors have been paid bythe contractor.

20) "Security deposit" means:(a) a bill of exchange

(i) 'that is payable to the Ministry of Finance,and

(ii) that is certified by an approved financialinstitution or drawn by an approvedfinancial institution on itself,

(b) a government guranteed bond, or(c) such other security as may be deemed

appropriate by the public body and approvedby the Ministry of Finance.

21) "Supplies" means all public property other thanfixed assets. It includes, all as~ets that will be usedwithin one year of purchase and costing less thanBirr 200.

22) "Suppliers' list" means a list that is establishedand maintained by the Ministry of Finance or by

" another authorized public body which sets out thenames and addresses of suppliers from whompublic bodies may solicit bids,

PART TWOFINANCIAL RESPONSIBILITY

3. Responsibilities of the Minister of FinanceThe Minister of Finance shall:;

I) Formulate and distribute Directives that detail theGovernments financial policies in all areas of theGovernment finances as detailed in theseRegulations;

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2) Develop and maintain appropriate standards ofwork and conduct for application throughout allpublic bodies internal audit functions;

3) prepare fiscal plan.4. Responsibilities of the Minister for Economic De-

velopment and Cooperation.The Minister for Economic Development andCooperation shall be responsible for:

I) Coordinating capital expenditure estimates;2) Preparation of macro-economic framework;3) Implementation of the Public Investment

Programme;4) preparation of estimates of regional subsidies.

5. Responsibilities of Heads of Public bodies.Head of Public Bodies have the duty to ensure that allof the resources for which they are responsible areused only for proper and approved purposes, and thatthey are used in the most economical, efficient andeffective way. Without limiting the generality of theforegoing, the financial responsibilities of head ofpublic bodies shall include but are not limited to:I) ensuring that the system developed within the

public body is functioning well;2) issuing delegations of authority to subordinates;3) establishing signing authorities for all employees

involved in the processes of receiving and disbur-sing public money and in procurement;

4) ensuring that the internal audit system is ap-propriately staffed with trained and qualifiedmanpower and that internal audits are carried outefficiently, effectively and economically;

5) ensuring that sufficient numbers of appropriately

trained employees are assigned to perfonn dis-crete function such that proper separation ismaintained in the internal control system;

6) developing internal directives and procudures

which complement the Financial AdministrationProclamation, these Regulations and any financialdirectives of the Ministry of Finance, which areunique to the particular public body;

7) ensuring that timely, relevant and reliable finan-cial information analysis is prepared and dis-seminated;

8) ensurig that the employees of the public body areperforming their duties in compliance with theFinancial Administration Proclamation, theseRegulations and procedures laid down in accor-dance with the Proclamation; and that the internalaudit is carried out timely;

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6. Responsibilities of Internal AuditThe Internal Audit of Public bodies shall be respon-sible for:1) conducting Internal Audit at specific intervals to

ascertain that public money and property are usedfor intended purposes, and submitting auditreports to the head of the public body;

2) developing audit programmes and auditprocedures which are specifically designed tomeet the requirements of the public body;

.

3) developing a monitoring system which will, atregular intervals, test and report to managementon the public body's compliance' with the ap-plicable internal and external directives andprocedures; and

4) advising management, at regular intervals, on itsinternal practices and controls an~ on whetherthey are efficient, effective and economical.

PART THREEPUBLIC INVESTMENT

PROGRAM PREPARATION,SUBMISSION AND APPROVAL

7. Principle1) The Public Investment Program is a three year

rolling financial plan of capital expenditure whichis to be prepared by the public bodies designatedby the Ministry of Economic Development andCooperation.

.

2) All capital expenditures shall be included in thePublic Investment Program.

8. Preparation and Submission of the Public InvestmentProgram

The Public Investment Program will be prepared andsubmitted in accordance with the guidelines prescribedby the Ministry of Economic Development and Co-operation in its animal Public Investment Program callletter. .

9. Public Investment Program CalendarThe Minister of Economic Development and Co-operation shall issue directives on Public InvestmentProgram Calendar in consultation with the Minister ofFinance.

10. Approval of the Public Investment Program1) Upon completion of evaluations and any neces-

sary revisions and discussions with the heads ofpublic bodies, the Minister of Economic Develop-ment and Cooperation shall present the PublicInvestment Program to the Council of Ministersfor review and recommendation.

2) The Public Investment Program recommended bythe Council of MinisterS shall be sObmitted to theCouncil of People's Representatives for its ap-proval.

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Federal Negarit Gazeta - No. 46 151 July 1997- Page 550.

"1.

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11. Discretion .

Ifa public body fails to submit its Public InvestmentProgram by the specified date in the call letters, theMinister of Economic Development and Cooperationshali use its own discretion as to what shall beinduded in this Public Investment Program.

PART FOUR .

nUDGET ESTIMATES-PREPARATION,SUBMISSION AND APPROVAL

12. Principle1) Budget Estimates of expenditures and revenues

shall be prepared for the coming fiscal year.2) The priorities established in the Public Invest-

ment Program set the priorities of the capitalbudget.

3) No capital expenditure shall be included in thecapital budget if it has not been approved in thePublic Investment Program.

4) Where a public body is pennitted to retain andexpend its revenues, such revenues shall beincluded in both its revenue and expenditureappropriation totals; no netting is permitted.

13. Preparation and Submission ot' budgetI) Budget Estimates shall be prepared in accordan-

ce with the financial limits and formats pres-cribed by the Minister of Finance and theMinister of Economic Development andCooperation in their annual budget call letters.

2) Budget Estimates of recurrent expenditures shallinclude a report of preliminary results of the firsthalf of the current year and previous yearperformance.

3) Budget Estimates of recurrent and capital expen-ditures shall be signed by the Heads of the publicbodies.

4) BUGgetEstimates of revenues from taxation andother sources shall be signed by the Heads of theresponsible public bodies.

5) Budget Estimates of recurrent expenditures shallbe presented and submitted to the Ministry ofFinance for evaluation, any necessary revisionsand consolidation.

6) The Budget Estimates of capital expendituresshall be submitted and presented to the Ministry_ofEconomic Development and Cooperation forevaluation any necessary revisions and con-solidation.

7) Budget Estimates of revenues from taxation and.

other sources shall be presented and submittedby the responsible public bodies to the Ministryof Finance.

.

8) Budget Estimates shall include Estimates of allaids-in..,kind that the public body expect toreceive in the upcoming fiscal year indudingfull details of the nature of the aid-in-kind and itsestimated monetary value.

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14. Approval of Budget Estimates1) Upon completion of evaluations and any necessary

revisions and discussions with the Heads of publicbodies, the Minister of Finance shall present thecompiled Budget Estimates of recurrent and Bud-get Estimates of capital expenditures to the Councilof Ministers for review and recommendation.

2) The Budget Estimates recommended by the Coun-cil of Ministers shall be submitted to the Council ofPeoples' Representatives. After approval, the Bud-get Estimates shall then be published in the NegaritGazetta and notification shall be made on theapproved estimates to the heads of public bodies.

15. Budget CalendarThe Minister of Finance shall issue directives on budgetCalendar in consultation with the Minister of EconomicDevelopment and Cooperation.

16. DiscretionIf a public body fails to submit its Budget Estimatesinaccordance with Article 15 of this Regulations, theMinister of Finance and Minister of Economic De-velopment and Cooperation shall use their own dis-cretion as to what shall be included in these BudgetEstimates.

PART FIVEBUDGET EXECUTION

17. Budget Transfer1) The Council of Ministers may grant transfers from

recurrent to capital appropriations when neces-sitated by an approved reorganization of a publicbody, or where it can be demonstrated that it isclearly beneficial to the achievement of govern-ment objectives.

2) Transfers from salaries, wages and allowances toanother recurrent expenditure budget shall besubject to the approval of the Minister of Finance.

3) No transfer shall be allowed from other recurrentexpenditure budget to salaries, wages and allowan-ces,

18. Budgetary Control1) Subject to directives of the Minister of Finance, the

heads of public bodies shall maintain a register ofappropriations, authorized transfers and allotmentsfor each budgetary head and sub-head and for eachcapital project.

2) Subject to directives of the Minister of Finance andthe Minister of Economic Development andCooperation, the heads of public bodies shallprovide information to enable the government tomaintain necessary central controls over budgetaryfunds,

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19. Supplementary Appropriation1) When the need arises, as a result of new or

unforeseen requirements; proposals for sup-plementary appropriations for recurrent expen-ditures shall be submitted to the Minister ofFinance in accordance with the directives of theMinister of Finance. .

. 2) When the need arises, as a result of new or.unforeseen requirements, proposals for sup-

.plementary appropriations for capital expendituresshall be submitted to the Minister of EconomicDevelopment and Cooperation in accordance withthe directives of the Minister of Economic De-velopment and Cooperation; and a copy submitted

.to the Minister of Finance.

20. Budget RequisitionAny public body which requires a transfer of funds shallcomplete the necessary number of copies of the BudgetRequest and Authorisation form in accordance withdirectives issued by the Ministry of Finance andforward them to the Ministry of Finance.

PART SIXPUBLIC DISBURSEMENTS

21. AuthorityPayments shall be made only if they are appropriated.

22. Payment VouchersNo payment shall be made unless it is adequatelyvouched; and public bodies shall complete PaymentVouchers for all payments in accordance with direc-tives issued by the Ministry of Finance.

23. List of Authorized PersonsI) The head of every public body shall establish and

have maintained a list of employees whom he orshe has authorized to sign the documents referredto in these Regulations.

2) Such lists shall be circulated to the senior financialofficer of the public body, the head of the InternalAudit of the public body, and to the Ministry ofFinance. .

24. Mode of PaymentPayments shall be made by means of cash, cheque,letters of credit, bank transfers, or payment orders, inaccordance with directives issued by the Ministry ofFinance. -

PART SEVENFEES AND CHARGES

25. PrinciplesAll public bodies shall consider the following principlesin establishing and maintaining fees and charges:1) the promotion of fairness to tax payers by shifting

the costs of a particular activity from taxpayers atlarge to the specific users who benefit most directly

,

from that activity, and/or

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Federal Negarit Gazeta - No. 46 151 July 1997- Page 553

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2) the promotion of a more efficient allocation ofresources by introducing a commercial-type dis-cipline on the demand for and supply of goods andservIces.

26. Survey of Activities

Subject to the proclamation which established them allpublic bodies shall conduct survey of all their activitiesin order to determine those for which they mayjustifiably subject their clients or users to a fee or acharge.

27. Criteria for Detennining Level of Fees & Charges

In determining the level of Fees and Charges all publicbodies shall take into consideration the followingcriteria;

I) The cost of the activity in question;

2) An initial assessment of the revenue potential ofthe fee and its ramifications on this activity andother activities of the government;

3) The willingness and ability of users to pay in thelight of the quality and value of the goods orservices; and,

4) The apparent level of user satisfaction as indicated by

quality and value of the goods or services.

28. Approval

The heads of the public bodies shall forward their recommen-

dations for new fees and charges and changes in existing fees

and charges, through the Minister of Finance, to the Council

of Ministers for its approval.

29. Publication

All public bodies shall publish the details of all new approved

fees and charges and any approved changes to existing fees

and charges together with their effective dates.

30. ReviewAll public bodies shall review the adequacy of their fees and

charges at intervals stated in directives issued by the Ministry

')f Finance.

PART EIGHT

RECEIPT AND DEPOSIT OF PUBLIC MONEY

31. Collection and Deposit of Public Money

The Head of every public body shall ensure that there is anadequate and effective internal control system for the

collection functions within the public body so that all publicmoney, which the public body is legally obliged to collect, is

collected promptly.

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32. Receipt of Public MoneyI) For every sum of money collected on behalf of the

Federal Government of Ethiopia, a serially num-bered, official receipt of the Ministry of Finance shallbe issued.

2) For every remittance received, including cash trans-fers from the Ministry of Finance or other publicbodies, whether they are in the form of cash, chequeor bank transfer, an official receipt shall be issued tothe remitter by the receiver.

33. Temporary CustodyI) Public bodies may receive and keep any sum of

money on behalf of orgnizations or individuals fortemporary custody in trust or any other reasons whenthey are ordered by courts or appropriate publicbodies.

2) Public bodies shall keep such money seperately fromreceipts of money belonging to the Federal Govern-ment.

34. ColJectionin ChequesCheques drawn on a bank within Ethiopia may beaccepted in payment, subject to directives issued by theMinistry of Finance provided they are not post-dated andare made payable to the public body to which they aretendered. If they are accepted, such cheques shall beimmediately endorsed restrictively as follows: "ForDeposit Only to the Consolidated Fund (name of

, receiving public body)"

35. Deposit1) Every person who collects or receives public money

from a collector or from any other person shalldeposit it daily or in accordance with the exceptionscontained in directives issued by the Ministry ofFinance.

. I2) All such deposits shall be made either in the bank

account of the public body which collects it, orin thebank account of the Ministry 0{ Finance' with theNational Bank in Addis Ababa or with banksdesignated by the National Bank.

3) Cheques not made payable to the Consolidated Fundof the Federal Government of Ethiopia or to thepublic body to which they are tendered, bills ofExchange and Promissory Notes are not acceptablefor deposit.

36. RecordingI) All Recording of receipts under Articles 32 and 33

shall be done in accordance with directives of theMinistry of Finance.

2) All receipts of public money, except for Refunds ofExpenditure as described in Article 32, of theFinancial Administration Proclamation, shall berecorded as revenue.

37. DirectivesDetailed procedures for the collection and deposit ofpublic money shall be issued by the Ministry of Financeas directives.

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PART NINEADVANCES

38. Advances for Purchases

1) When necessary to make purchases cash advancesmay be made to an employee of a public bodywhich must be settled within seven working daysafter payment is received unless otherwiseauthorized by the Head of Public Body.

2) The maximum amounts of such advances shall beestablished by the head of the public body or by anofficer authorized in writing by the head of thesame public body. The criteria for determining theamount of such advances shall be determined inaccordance with directives issued by the Ministryof Finance.

39. Advances of Per diem and Travel Allowances

I) No per diem shall be paid for more than 3 months.2) Advances of per diem and travel allowances shall

be made in accordance with directives issued bythe Ministry of Finance.

40. Short Tenn Salary Advances1) Short term salary advances may be granted to an

employee inaccordance with directives issued bythe Ministry of Finance.

2) Short term salaryadvances shall be deducted fromthe employee's salary in the same month in whichthe advance was granted.

3) Ministry of Finance may maintain a revolving fundto be used by public bodies for the payment of shortterm salary advances.

41. Long Tenn Salary AdvancesLong term salary advances may be granted to per-manent employees in accordance with directivesissued by the Ministry of Finance.

42. Restriction in AdvancesNo advances of the same type may be issued to anemployee of a public body unless and until all existingadvances are accounted for or returned by theemployee to whom they were issued.

43. Recovery of Outstanding Advances1) Where any employee of a public body fails to

repay or account for an advance or any portion ofan advance made to him or to her in accordancewith these Regulations, the outstanding amount ofthe advance may be recovered from any moneypayable to him or her by the Federal Governmentof Ethiopia, except for pension money payable.

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44.

2) Where an advance or any portion of an advancemade to any employee of a public body under theseRegulations remains outstanding and unaccountedfor at the time of his death, the outstanding amountof advance may be recovered from any moneypayable by the Federal Government of Ethiopia tothe heirs of employee, except for pension moneypayable.

3) All public bodies shall review all advances outstan-. ding at the end of every month as the basis for taking

the necessary action to clear o~erdue advance.

4) Every public body shall ensure that all of itsemployees who resign or retire are required to clearadvances before they receive their last payment ofsalary .

5) In the month following the end of each fiscal year,each public body shall prepare a complete analysisof all outstanding advances. This analysis $hallisolate all those outstanding advances which areconsidered to be irrecoverable and shall be suppor-ted by a brief indication of why this.determinationwas made. A copy of this analysis shall beforwarded to the Ministry of Finance within twomonths of the end of each fiscal year.

RecordsEvery public body shall maintain appropriate andcomplete accounting records of all advances made bythe public body.

ReportingSubject to directives issued by the Minister ofFinance, all public bodies shall report all advancesoutstanding at the end of every fiscal year in thePublic accounts for the fiscal year just ended. Thisadvances shall be divided according to whether theyhad been made in that year or in prior years. Inaddition, all public bodies shall report all advanceswritten off in the fiscal year just ended according towhether these advances had been made by the publicbody in that year or in prior years.

45.

PART TENWRITE-OFFS OF RECEIVABLES. OBLIGA TIONS

AND CLAIMS

46. Power to Write-off

1) The Head ofa public body or the Deputy Head onbehalf of the Head shall have the power of write-off upon the recommendation of a review com-mittee in every case upto an amount of Birr10,000 which does not exceed a total amount ofBirr 50,000 in a fiscal year.

'.

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.:) The Minister of Finance shall have the power ofwrite-off upon the recommendation of the Head ofthe public body aDda review committee in everycase where the amount is more than Birr 10,000which does not exceed Birr 100,000 in a fiscal year.

3) The Minister of Finance shall issue directives for

the establishment of a review committee.

4) In every case where there is an amount of 100,000Birr or more proposed to be written off, the mattershall be referred to the Council of Ministerstogether with the recommendation of the head ofthe public body, the recommendation of the Minis-

'cr of Finance, and all other relevant informationnecessary for the Council of Ministers to make itsdecision.

47. Employees and Former EmployeesI) No receivables, cbligations or claims resulting

from the overpayment by the Federal Governmentof Ethiopia of salaries or employment-relatedallowances, or any part of them shall be written offwithout~ the prior approval of the Council ofMinisters.

2) Notwithstanding sub-Article ( I ) of this Article theprinciple of write-off shall apply to receivables,obligations or claims owing to the Fe. 'fal Govern-ment of Ethiopia by its fonTIer em~-.0yees that arediscovered after their employement has ceasedand all benefits payable to them have been paid.

48. Duty to RepOI11) At the end of each month every public body shall

prepare a complete analysis of all receivables,obligations and claims and forward a copy of it tothe Ministry of Finance. This analysis shall isolateall those receiNables, obligations and claims whichare considered to be uncollectible and shall besupported by a brief statement of why this deter-mination was made.

2) Subject to directives issued under the authority ofArticle 53 of the Financial Administration Pro-clamation, all public bodies shall report allreceivables, obligations and claims which are out-standing at the end of every month to the Ministryof Finance and shall report all receivablesobligations and claims which are outstanding athe end of every fiscal year in the Public Accounlfor the fiscal year just ended.

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=to

3) In addition, all public bodies shall report all receivables,

obligations and claims written off each month to theMinistry of Finance and shall report all receivables,obligations and claims written off in the fiscal year just

ended according to whether these write-offs pertainedto receivables, obligations and claims of that year or ofprior years.

49. Directives

The write-off of a receivable, obligation or claim orpart of a receivable, obligation or claim shall be done

in accordance with directives issued by the Minister of

Finance.

PART ELEVEN

PUBLIC DEBT AND THE

INVESTMENT OF PUBLIC MONEY

50. Debt Management Strategy

I) Debt management strategies shall be developed,

by the Minister of Finance based on the overall

objective of borrowing appropriate amounts atappropriate times and in a way that will balance

minimization of costs with cost stabi lity.

Borrowing shall take into account non-interest

costs, such as the different marketing costs of

various debt instruments; these include the

various commissions, fees, and other adminis-

trative cost of registrars and fiscal agents.

2)

3) Borrowing shall be managed to avoid any

negative impacts on the general economy, such

as creating instability in monetary policy or

balance of payments.

Short-term borrowing shall be based upon

reliable, current information on the government's

balances in the banking system, exchange market

activity, and Budget Estimates of fiscal inflows

and outflows.

4)

5/. Borrowing

I) The Minister of Finance shall prepare an annual

Fiscal Plan for the approval of the Council of

Ministers that shows background data and analysis

of changes in debt from the prev:ous plan, and

projections of debt level and annual servicing costs

for the present and three upcoming years.

"K'M=tii t.,fDt..A ~;Jk} :JlLI', 'I:'I'C ~'!% M. ~!! .,.') !ii£1fii '}.9". Federal Negarit Gazeta - No. 46 1st July 1997 - Page 559

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(~",}'.9"hC n.'). nO'/A'C1I t;rc.l. OOf.1l"': ,,1\0,1-::

2) The Minister of Finance shall, in accordance with

the approved Fiscal Plan, submit for approval of the

Council of Ministers periodic proposals to meet the

government's financial requirements. These

proposals shall contain information on how the

money shall be raised such as by loans and/or by the

issue or sale of securities.

52. Guarantee

The Minister of Finance shall ensure that no guarantee

of the performance of an obligation shall be made

unless full consideration has been given to:(a) Why the guarantee is necessary and the benefits

that will be gained from it;(b) The appropriation(s) and budgetary items that

would have to be charged if the guarantee is

exercised; and(c) The probability and consequences of the guarantee

having to be exercised.

53. Investment1) Money in the Consolidated Fund. that is not

immediately required for payments. shall only be

invested in securities when the Minister of Finance

is satisfied that it is truly surplus to requirements

and cannot be put to better use in some other area

of public debt management.

2) Sinking funds shall normally only be established

where it is considered economically sound by the

Council of Ministers. Sinking funds for Capital

replacements shall only be reserved for the pur-

pose intended.

3) The creation of a sinking fund shall be supported,

as a minimum, by a thorough business case, linked

to the Fiscal Plan and the Public Investments

Programme, showing why it is beneficial to

establish such a fund. This business case shall also

show the investment options considered and the

reason why the one chosen is best.

4) The management of a sinking fund shall be

supported by a system of records and periodic

reports to the Council of Ministers on the progress

of the sinking fund, any changes made since the

previous report, and projections of its expected

value by its planned date of maturity.

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Fcderal Negarit Gazeta - No. 46 I'. July 1997- Page 560

5) Cash shall be managed to keep balances atminimum levels, given operational needs and thevariability of cash flows.

54. Assignment of Debts1) No assignment of debts of the Government of

Ethiopia shall be made by a foreign lender withoutthe formal agreement of the Government ofEthiopia evidenced by the signature of the Minis-ter of Finance. Before signing the Minister mustestablish that the assignment is under the same, orbetter terms and conditions for the Government ofEthiopia than the original debt arrangement.

2) No assignment of the domestic debts of thirdparties or the right to collect the domestic debts ofthird parties shall be made to the governmentwithout the approval of the Minister of Finance.Such assignments must have the signed ack-nowledgement of the assignment by the Ministerof Finance. Before acknowledging the assign-ment, the Minister of Finance shall be providedwith the properly authenticated legal documents.

55. Government's Banker and Fiscal Agent.I) The Minister of Finance shall instruct the

National Bank of Ethiopia on the government'srequirements arising from the Fiscal Plan andBorrowing Proclamations.

2) The Minister of Finance shall monitor theperformance of the National Bank of Ethiopia byrequiring it to provide monthly reports on itsactivities as the government's fiscal agent.

56. Books and RecordsThe Minister of Finance shall cause to be maintaineda system of books and records on its public debtmanagement in accordance with Article 45 of theProclamation. In addition, this system will:(a) Show all money authorized by the Council of

Ministers to be borrowed,(b) Contain a descriptio~ of and record of all money

so borrowed;.

(c) Show all money paid in respect of the principal ofor interest of all money. so borrowed; .,

(d) Contain a description of and record of all moneyinvested and;

(e) Show all money earned from this money soinvested, as well as amounts paid for theacquisition, administration, and redemption ofthese investment&;

(f) Contain a description and record of all guaranteesauthorized and;

(g) Show all payments out of the Consolidated Fundagainst such guarantees, including the reasonswhy such payments were necessary;

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Federal Negarit Gazeta ~ No. 46 1st July 1997 - Page 561

57.. Reporting RequirementsThe Heads of public bcdies shall submit monthlyforecasts of cash requirements and monthly reports offinancial usage in accordance' with directives issuedby the Minister of Finance under these Regulations.

PART TWEL VEPUBLIC PROPh"RTY

58. PrincipJeThe public property shall be managed to ensureeconomy, efficiency and effectiveness in its

.acquisition, use, maintenance, protection and disposalwithin budgetary constraints.

59. Acquisition ,

1) All acquisitions of public property shall be for the, sol~purpose qf facilitating the delivery and main-

tenance.of approved programmes as efficiently andeffectively a~possible.

2) The Ministry, pf Bnance shall account for andadminister property of the Federal Governmentwhich is not administered or used by any otherpublic body.

60. Use and Mainten.ance1) Heads of PUblic Bodies shall ensure that all public

property is used as productively as possible incarrying out the responsibilities of their publicbodies.

'

~ Heads of Public Bodies shall estabiish a propermaintenance system for all public property to ensurethat it will operate as economically and effectively aspossible in accordance with the directives of theMinister of Finante.

61. Management of PubJjc Property1) The Heads of public bodies shalhtdopt a life-time

approach to the Management of public property.2) The Heads of pUblic bodies shall ensure that items

ofpubHcproperty are recorded as to date, descrip-tion, quantity and cost from acquisition to the endof their life-time.

3) The Heads of public bodies shall ensure that thecustodial responsibility for each

"fixed asset

acquired is assigned to the primarily responsiblefor its use and that there isa central record of thenames of the custodians, and the locat,ions of thefixed assets assigned to' them.

4) The Heads of public bodies,.shall ensure thatsupplies, not acquired for immediate consumption,shall fonn part of supply inventories and thatcustodial responsibility be ,assigned for such inven-tories.. .

5) All invento~ies of, public propyrty shall bephysically verified against records atleast an-nually. '

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Federal Negarit Gazeta - No. 46 IS! July 1997- Page 562

.. .

6) Where the actual cost of public property is notdeterminable, its cost shall be estimated in accor-dance with directives from the Minister of Finance.

7) The Heads of public bodies shall ensure that. thev.alueof all inventories of supplies and the descrip-tion and cost of fixed assets shall be included in thePublic Accounts in accordance with directves ofthe Minister of Finance.

8) Valuation and Costing of public property shall bedetermined by the directives of the Minister ofFinance.

62. Protection and PreservationThe Heads and all employees of public bodies areresponsible for the ptotection and preservation ofpublic property.

63. Disposal1) The disposal of public property :>hallbe in accor-

dance with directives of the Minister of Finance.2) The description and amount received from all

public property disposed of shall be included inthe Public Accounts.

64. Deletion.

1) Where public property is considered to be of no usein the public body or elsewhere, and has no- scrapvalue, it shall be deleted in accordance with thedirectivesof the Minister of Finance. .

2) Deletion of public property shall be recorded whenlosses take place from inventory shortages, des-truction, theft or any other reason.

3) The description and amounts of all public propertydeleted shall be included in the Public Accounts inaccordance with the directives of the Minister ofFinance.

65. RevenuesI) The raising of any revenues on public property by

public bodies shall be in accordance with directivesof the Minister of Finance.

2) All revenues from the use or disposal of publicproperty shall be deposited in the ConsolidatedFund unless a public body has the authority toretain and expend these revenues.

PART THIRTEENPROCUREMENT-CONTRACTS

66. Principle1) All public bodies shall ensure that they obtain the

best Value for the public moneY"they spend inawarding all their procurement contracts.

2) Public bodies shall purchase goods produced inEthiopia in preference to goods produced abroadwhere the price and quality are similar and wherethe goods produced in Ethiopia are to be deliveredwithin similar time as or a shorter time than thegoods produced abroad, or any other con-siderations as determined by the Council ofPeoples' Representatives.

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Federal Negarit Gazeta - No. 46 III July 1997- Page 563

67. Suppliers ListI) The Minister of Finance in consultation with an

appropriate public body shall establish.and main-tain a suppliers list for all local purchases, except'in so far as is provided to other public bodies underthis Article.

2) In the case of construction contracts, a sqpplierslist shall be established and maintained by theMinister of Works and Urban Development.

3) The Minister of Finance shall issue directiveslisting the criteria for the inclusion of contractorson suppliers lists and the Minister of Works andUrban Development shall do likewise for cons-truction contractors.

4) Minister of Communication and Transport shallprepare and maintain Suppliers List' for the Pur-

.chaseof VehiCles. "

5) Minister of Economic Development andCooperation shall prepare and maintain supplierslist for consultancy services.

6) Public bodies empowered to prepare and maintainSuppliers List shall from time to time include intoor delete from tQe Suppliers List.

68. BidsI) Before entering in~oany contract, all public bodies

shall solicit bids for such contracts in the mannerprescribed by sub-article 3 of this Article.

2) Notwithstanding sub Article (I) of this Article; apublic body may enter into a contract withoutsoliciting bids where anyone of the followingconditions apply:

(a) The Head of the public body had detennined(this shall not be delegated by him or her) andhas documented that the need is one ofpressing emergency in which delay wouldcreate serious problems and thereforebeinjurious 'to the prefonnance of that publicbody;

(b) the estimated expenditure does not exceed theamount to be detennined by directives of theMinister of Finance;

(c) the nature of the work is such that it would notbe in the interests of the Government ofEthiopia to solicit bids;

(d) only one contractor is capable of perfonningthe contract.

3) All public bodies shall solicit bids by:(a) giving public notice, in accordance with

generally accepted practices, of a call for bidsrespeCting a proposed contract, or

(b) inviting bids on a proposed contract fromsuppliers on a suppliers" list, or

(c) short-listing suppliers by the process of pre-qualification. '

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Federal Negarit Gazeta - No. 46 1SI July 1997 - Page 564

4) Foreign purchases will be made by means ofInternational Competitive Bidding unless there areexceptions provided in directives of the Minister ofFinance.

5) Only contractors in the approved Suppliers' listmay bid on contracts to be awarded by publicbodies.

6) All Purchases of Vehicles shall be made in accor-dance with specifications of the Ministry of Trans-port and Communication.

69. Bid SecurityI) All public bodies shall require contractors to give

the Federal Government of Ethiopia bid security.2) A public body may accept cash, cheque or a bid

bond as bid security.3) A public body shall hold any bid security that is

received by it until the terms of the security arefulfilled.

4) The amounts of any bid security shall be es-tablished by directives issued by the Minister ofFinance.

5) A public body shall hold any bid security receivedby it until it can be disposed of in accordance withsub-Articles (6) and (7) of this Article.

6) Where a bid is accepted and contract security isrequired to be provided,

(a) the public body shall continue to hold the bidsecurity until the contract security is provided;'and

(b) when the contract security is provided, thepublic body shall return the bid security to thecontractor from whom it was received unless itforms part of the contract security, in whichcase it shall be retained as contract security.

7) Where a bid is rejected, the public body shall returnthe bid security to the contractor from whom it wasreceived.

70. Contract Security1) All public bodies shall require contractors to give

the Federal Government of Ethiopia contractsecurity.

2) A public body may accept as contract securitycash, a cheque, a performance bond. a negotiableor a non negotiable security.

3) Where cash or a cheque is received by a publicbody as contract security or is retained by a publicbody in accordance with Article 69(6)(b) of theseRegulations, the public body shall immediatelydeposit the cash or cheque in the ConsolidatedFund.

4) Where a negotiable security deposit is received, thepublic body shall:

(a) hold the contract security in safe keeping; or(b) immediately forward the contract security to

the Minister of Finance for safekeeping.

I1R' ?;!;!:t.~f..t.:&\ '1;Jti- ;JtLlIJ~'1'C,~t'I);?;!L":' HltH'U~'""

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C.). "'1'"./..0 P'C1i'}'I\UIJ**9"hr.-i\PO.f..' "'.ctri\'f11I1oflOlJ.ti\')'C "",n.(I)''}.(~;Jtj: ,e.r\II}t\ ::

f~~er~l,~~~aritGazeta ~~oJ? .,,1~I,/~1YI99?:Z'.~age 565"

. ..

5) Where a negotiable security deposit has beenreceived by a public body in respect of a contractand the contract has been:

,(a) satisfactorilyperf()(I11ed, or(b) 'teffilirhtted for a reason that is not attributable

to any fault of the contractor,and the ~~deral Government of Ethiopia has

,

no claim against the contractor arising out ofthe contract or ,relating in any'manner to thecontract, the pUblic body shall return thatsecurity deposit to the contractor.

71. Loon and AidContracts which are financed by foreign 10ansandJoraid shall be governed by the teffils of the bilateral ormultilateral agreement.

72. Progress Payment1) Any public body may enter into a contract that

provides for the making of progress payments,

where it is deemed necessary forthe most efficientand effective execution of the contract.

2) A public body shall retain or hold back a portion ofthe progress billings called for under the teffils ofevery contract until the public body is satisfiedthat the contract has been completed and that all

,nominated' . subcontractors who have, been ap-proved by the public body concerned have beenpaid by the contractor. ,

'

3), The amount retained and the duration of theretention shall be stipulated in directives issued by

- the Minister of Finance. '

(3. Provisions applicable to Co~tracts,

Without limiting the speCialprovisions of theseRegulations,government procurern~ntshan be gover-ned' by the Provi,sions of 'Admiriistrative'Contractsunder the Civil Code of Ethiopia

"

PART FOURTEENFEDERAUST ATE FINANCIAL RELATIONS

14: Financial Reporting Systems,1) The financial reporting systems of State Govern-

ments shall correspond with those ()f the FederalGovernment.

,2) The financial reporting requirements of the Coun-cil of Ministers shaH be observed by"the. Federal

, and State Governments. ,

3) The Minister of Finance shan provide the neces-sary guidance and support to State Governmentsto enable them to establish and maintain financialreporting systems tl1af\vilJ'facHitate Federal-Statefinancial relations.

1~' ?;y'~I;~toY.I..A .,:J/.,1' :J,L"I '1:'1'1:~ I'll ?)~ +1 :Wf.'j('ii 'J.9'".

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Federal Negarit Gazeta - No. 46 1'1 July 1997 - Page 566

4) The State Governmets shall provide monthly, quar-terly, semi-annual and annual financial reports to theMinister of Finance that follow the fonnats developedby the Minister of Finance in accordance with therequirements of Council of Ministers. These reportsshall show details of their receipts and disbursementsby revenue and expenditure source codes; their cashbalances and levels of outstanding debt; and theirperfonnance against the objectives stated in theirsubsidy requests.

5) The Minister of Finance shall prepare consolidatedand comparative monthly, quarterly, semi-annual andannual financial reports for State Governments, inaccordance with the details submitted by those gover-nments as described in sub-Article (4) of this Articleand submit them to the Council of Ministers.

6) Complete records on the financial transactions be-tween the Federal and State Governments shall bemaintained by the Minister of Finance.

75. Domestic BorrowingI) The financial requirements of the State Governments

shall be closely aligned with the Federal Govern-ment's fiscal plan and budget and both levels ofGovernment shall ensure that their respective finan-cial organizations maintain close working relationsduring the course of the fiscal year to minimizeoverall borrowing costs and to (\(.:t in the bestinterests of the national economy.

2) The Minister of Finance shall monitor the disbur-sements of the National Bank of Ethiopia and anyother entities against the borrowings of State Gover-nments and reconcile these with the periodic finan-cial r~ports it receives from the State Governments.

76. Tax HannonizationI) Consultations between Federal and State Govern-

ments shall take place on all new or changed taxes atboth levels of government to ensure that the tax basesare hannonized and standardized.

2) The Minister of Finance shall provide, as required,research and administrative support to State Govern-ments to facilitate the harmonization and standar-dization of their tax bases with those of the FederalGovernment.

77. Subsidy and Foreign Currenc.yI) The Federal Government shall <:dvise the State

Governments of their budget subsidy ceillings in timefor them to prepare their regional budgets.

2) Before the approval of the budget, State Govern-ments shall submit to the Ministers of Finance andEconomic Development and Cooperation their sub-sidy requests.

3) State Governments shall submit their foreign curren-cy requirements to the Ministry of Finance.

78. Fonnats and DeadlinesThe Minister of Finance shall establish the format anddeadlines for the submissions by State Governments oftheir:(a) Subsidy requests, including their revenue forecasts;(b) internal borrowings; and(c) foreign currency requirements.

.,~. ?i¥.:!,"% J.,y../../A ~;J~~' .?'Lffl <~'I'C~} (}). r;-!!4>1 Iuhru ~'9'" Federal Negarit Gazeta - No. 46 Ist July 1997 - Page 567

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79. Public AccountsThe Public Accounts shall contain details of thefinancial transactions between Federal and State Gover-nments, performance against the financial plans of StateGovernments vis-a-vis their budget subsidies. and fiscalyear-end reports on the financial status of the Federaland State Governments on a consolidated and com-parative basis.

80. AuditI) The Ministry of Finance shall have access to the

accounts of the State Governments necessary for itto conduct audits of their use of budgetary sub-sidies received from the Federal Government.

2) The Auditor General, as part of his or her normalaudit programme, should audit the Federal Govern-ment's records of its financial transactions withState Governments.

PART FIFTEEN

LOSSES OF PUBLIC MONEY AND PUBLIC PROPERTY81. In vestigation

I) All losses of public money and public property,however they are reported, require full inves-tigation with the complete cooperation of all theemployees of the public body.

2) Suspected losses, with the exception of certainminor, employment-related incidents which do notinvolve criminal activity, must be reported to thepolice.

3) Any preliminary examination undertaken by apublic body shall be limited to ascertainingwhether there is a possible basis to an allegation.

4) The responsible department head may refer suspec-ted losses involving employees, that do not requirean immediate response by the police. to the publicbody's legal branch for an opinion on the serious-ness of the incident before further action is taken.

82. ReportingI) Every employee who discovers or suspects that a

loss has occurred shall report it immediately to thehead of his or her department. The latter isresponsible for ensuring that all losses which arereported to him or her are promptly reported inwriting to the administration department of thepublic body with copies of the report to its legal andinternal audit departments. In addition the adminis-tration department will forward a copy of thisreport to the Head of the Public Body and theMinistry of Finance.

2) All public bodies must ensure that all their em-ployees are aware of their responsibility to reportall losses of which they have knowledge.

83. Civil actionI) Action must be undertaken in accordance with

directives issued by the Minister of Finance torecover all losses.

2) When an employee is accountable for a loss ofmoney or property, the loss must be recovered fromthat employee unless the Minister of Finance hasspecifically authorized the public body to waiverecovery in accordance with Artide <) of theFinancial Administration Proclamation.

1K" {;~;!;~~.U.t.-A ~,.?t:r- ;J/l.1I} <I:'I'C~ (a~tt!!.,., Iiifitil ~'9'"' FederalNegarit Gazeta- No. 46 ISI July 1997- Page 568

. 'it§. f-'tl\TA.') "C9"1{ .

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84. Disciplinary Action1) Subject to directives issued by the Federal Civil

Service Commission disciplinary action shall betaken against the employee(s) involved in the loss,when the head of a public body considers that thecircumstances warrant it.

2) When a public body determines that disciplinaryaction is warranted, such action is distinct fromany other measures that may be taken by theappropriate authorities.

85. ReimbursementLosses of money that require a disbursement toreimburse such as imprest funds, cashier shortages andall losses of revenue shall be charged to the ap-propriation oithe related activity, after approval by thehead of the public body or such other, senior employeeas may be designated in writing by him or her.

86. Government safesI) In the event of the unauthorized absence, death or

incapacity of a cashier of a public body the safeshall be sealed by the senior financial officer andthe head of the Internal Audit.

2) The Head of the public body shall immediatelyestablish a committee in accordance with direc-tives issued by the Minister of Finance to deter-mine the contents of the safe and prepare a list ofthem. .

3) This committee shall conduct an examination and. report its findings as required by directives issued

by the Minister of Finance.87. Reporting of Losses

1) All losses must be reported in the Public Accounts.2) The gross amount of a loss (estimated when

necessary) irrespective of any recoveries, is to bereported in the Public Accounts for the fiscal yearin which the loss occurred or, when the loss is notdiscovered in time, in the first Public Accounts inwhich it is practicable to do so.

3) Recoveries against losses are to be reported in thePublic Accounts for the fiscal year in which theamount is recovered.

PART SIXTEENRETENTION OF RECORDS

88. Time Limit1) All public bodies shall retain all financial infor-

mation and records for a length oftime adequate tocover all required references to that informationby the public body itself or external auditors.

2) Notwithstanding sub-Artic~e (I) of this Article allfinancial information and records shall be retainedfor a minimum of ten years.

89. Types of Records to be RetainedFinancial information and records to be retained underArticle 89 of'these Regulations shall include:

'IX' ?;y':!~!j J..fpl..p.. .,;)/..1' ;J'Lff, '~'I't: ~ M. ~~ +, Ijj~'«'»~.9'" Federal Negarit Gazeta- No.46 IIII July 1997 - Page 559

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tn :"l\f.."7. t 1I,).C

I) All submissions for approval to the Ministry ofFinance andldr the Council of Ministers,

2) All documents that infoITtl of decisions beingtaken,

3) All correspondences that relate to tinacial matters,4) All details of financial transactions and supporting

documents,5) All basic financial records such as cash books and

records of receipts.90. Methods of Retention .

The Minister of Finance shall issue directives thatdetail the method and length of retention of financialinfonnation and records.

91. Effective DateThese Regulations shall come into force on the date ofits publication in the Federal Negarit Gazeta.

Done at Addis Ababa on this 101day of July 1997.

MELES ZENA WIPRIME MINISTER

OF THE FEDERAL DEMOCRA TICREPUBLIC OF ETHIOPIA

'III:Y1" f)i!r "'I1'1If.." .(-{.~'J'

BERHANENA SELAM PRINTINGENTERPRISE

pro 57 p25/proc