AG Meseret Flags Billions in Unrecovered Funds

Jun 29 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )

The federal government continues to wrestle with entrenched fiscal mismanagement, a scathing audit report by Auditor General Meseret Damtie revealed.

Presenting her findings to Parliament last week, she commended the uptick in the number of federal agencies receiving “clean” audit opinions for the fiscal year 2023/24. However, Meseret’s report painted a picture of chronic inefficiency, unaddressed irregularities, and billions of Birr in both unspent budgets and unrecovered public funds.

At the heart of the revelations is an alarming 14.5 billion Br in budget allocations that went unused, funds earmarked for capital projects, development programs, and operational costs. The figure, though a decline from the 19.9 billion Br unspent the previous year, represents an ongoing systemic failure in budget absorption and implementation.

Leading the roster of underperforming agencies is the Ministry of Agriculture, under minister Girma Amente (PhD), which failed to utilise a staggering 7.8 billion Br in capital allocations. The Customs Commission left 574 million Br idle, while Arba Minch University exhibited the paradox of overspending by 210 million Br while simultaneously leaving 420 million Br unutilised, an embodiment of the widespread disarray in institutional cash flow planning.

Officials at Arba Minch University attributed the discrepancy to advance payments made on undelivered equipment and emergency reallocation of internal funds amid bureaucratic inertia at the Ministry of Finance. Yet, such explanations exposed the deeper issue of a governance culture where informal workarounds replace formal compliance.

Federal universities emerged as recurrent offenders in the Auditor General’s findings. Haramaya University overshot its budget by 422 million Br, while Gambella and Wollega universities trailed with 214 million Br and 198 million Br in excess spending, respectively. Overspending often comes from underestimates in recurring costs like student meals and academic services, aggravated by inflation and the rigidity of mid-year budget adjustments.

Audit directors at several universities, including Gondar’s Amsalu Ayenew, voiced frustration over allocations that failed to keep pace with market realities. Their recourse, reclassifying funds outside standard budget lines, while arguably pragmatic, runs afoul of the legal requirement to seek formal budget amendments, a lapse Meseret categorically condemned.

“Institutions must report anticipated shortfalls and request transfers legally,” she cautioned. “Unauthorised spending undermines fiscal discipline and impedes public service delivery.

A particularly damning revelation involves the ballooning stockpile of public receivables, amounting to 32.9 billion Br, comprising debts that are long overdue, with some stretching back over a decade. The Ministry of Health (MoH), under Mekides Daba (PhD), alone accounts for 6.7 billion Br, while Abraham Belay’s (PhD) Ministry of Irrigation & Lowlands (MoIL) trails with 1.7 billion Br. Compounding this are 3.6 billion Br in uncollected tax and customs arrears, and an additional 346 million Br lost due to valuation and foreign exchange conversion errors.

Despite years of audits identifying recoverable amounts totalling 20.49 billion Br, a mere 14.2pc - 2.91 billion Br - has been collected. Meanwhile, the federal government itself owes 11.3 billion Br in overdue payments, raising questions about intra-governmental fiscal accountability.

Procurement remains another area plagued by audit violations. Over 404 million Br was spent outside the parameters of public procurement law, including 229 million Br in direct purchases where competitive tendering was required.

Nonetheless, AG Meseret noted a considerable improvement in audit opinions, with 115 agencies receiving unqualified or “clean” audits, up from 79 the previous year. Adverse and disclaimer opinions dropped by half to 10, while qualified opinions fell to 38.

However, these improvements in financial reporting have not translated into operational discipline. The Ministry of Innovation & Technology, led by Molla Belete (PhD), failed to justify 65pc of its 1.58 billion Br in expenditures flagged by auditors. In contrast, Jimma University accounted for 97pc of its questioned spending, showing that improved compliance is possible.

“There’s a significant disconnect between technical reporting improvements and actual accountability,” Meseret said, branding the persistent “negligence” in addressing past audit findings as a systemic governance failure.

Lawmakers across the aisle reacted with visible exasperation.

Opposition MP Abreham Berta (PhD) of the Ethiopian Citizens for Social Justice party questioned the moral basis of aggressive tax collection when the state itself haemorrhages resources through mismanagement.

“How do we justify this waste while burdening citizens with tax hikes?” he asked.

Even MPs from the ruling Prosperity Party expressed dismay. Nezif Zinab attributed delays in infrastructure delivery not to funding shortages but to the mismanagement of available resources.

Economic analysts echoed these concerns. Mered Fikire Yohannes, CEO of Pragma Capital, raised inflation-induced forecasting errors and the rigidity of the public financial management system.

“We’ve a clear legal framework,” he noted. “The problem is enforcement. Budget shortfalls and overspending are preventable if institutions seek authorised reallocations.”

Mered also criticised the Auditor General’s lack of enforcement teeth, blaming the absence of prosecutorial powers to hold violators accountable.

Some institutions, including Gondar University, claimed they had warned of budget insufficiencies, but were met with bureaucratic inertia. Whether this constitutes a systemic communications failure or a strategic deflection remains open to interpretation.

Meseret urged a multi-pronged reform response, including recovery of outstanding funds, enforcement of penalties for violations, and the institutionalisation of real-time budget redistribution to address urgent shortages.

“Unused budgets should be rechanneled in real time to institutions facing shortages,” she argued. “This would maximise fiscal efficiency and improve service delivery.”

PUBLISHED ON Jun 29,2025 [ VOL 26 , NO 1313]