The federal government is set to roll out a single-account treasury system for the coming budget year, consolidating accounts by federal agencies under one.

Federal officials began taking steps toward the single-account system earlier this year. Although the idea initially surfaced a decade ago, it has yet to see its full implementation.

Financial pressures on government coffers have been the main drive as external loan disbursements fall and global prices for commodities such as fuel, fertiliser, and wheat soar. The pressure was evident last December when the administration of Prime Minister Abiy Ahmed (PhD) requested Parliament to approve a 122 billion Br supplementary budget to the 561 billion Br bill Parliament appropriated in June 2021.

Finance Minister Ahmed Shide and his deputies were adamant during federal budget hearings two months ago about the need to cut public spending; at the cost of folding sluggish projects while blocking the approval of new projects. The Minister emphasised the policy when he faced question time in Parliament after tabling the 786.6 billion Br budget bill for a budget year to begin next week.

“The fiscal space that allowed the government to provide financing for development objectives is narrowing,” said Ahmed.

Officials say the single-account system is designed to block revenue leakages and prevent the rampant mismanagement of public funds.

Meseret Damtie, the Federal Auditor General, attested this to legislators last month when she presented audit findings on federal agencies. The Auditor General found that two dozen federal agencies spent 645 million Br above budget. One-fourth of this amount spent by 41 federal agencies was not supported with documentation, revealed the audit findings.

Meseret replaced Gemechu Dubiso, who left the federal audit office this year.

Federal auditors uncovered 107 million Br in overtime payments, per diems and spending without the authorisation of the Civil Service Commission.

Legislated 13 years ago, the proclamation governing public funds granted the National Bank of Ethiopia (NBE) the mandate to decide where the funds are to be deposited. Although regulators have designated the state-owned Commercial Bank of Ethiopia (CBE), various budgetary institutions have transacted through accounts opened at private commercial banks.

"Government agencies do not have accounts at our Bank," said Girum Tsegaye, president of Berhan Bank.

Nonetheless, Eyob Tekalign (PhD), a state minister for Finance, ordered federal agencies two months ago to cease the practice, instructing Gemechu Lulesa, director of the inspection department, to follow up.

Neteru Wendwossen, director of treasury, is responsible for streamlining the single-account system.

Federal agencies that fail to comply were warned they would not receive money next year. They mainly use a zero-balance account (Z Account) system, which was instituted in 2005. The federal agencies receive funds through their accounts at the CBE, where cash is deposited daily by the Ministry from its treasury account held at the central bank. They can withdraw money from their accounts up to the monthly limit. However, they are required to deposit unutilised funds into the central treasury account at the end of each day.