WHEREAS, the House of the Federation of Federal democratic Republic of Ethiopia is mandated by the Constitution and other specific laws to determine the division of revenues derived from joint Federal and State tax sources, and the subsidies that the Federal Government may provide to the States as well as to determine the formula for the distribution of subsidy based on study,

WHEREAS, as it appears to date, since the system of the division of grants and joint revenues lacks uniformity and integration, it has been found necessary to put in place and implement a comprehensive system so that it may be possible to close the gaps which have come to be observed from time to time with respect to equity and effectiveness of the allocation thereof,

WHEREAS, it is found vital and appropriate to make the process of the division more transparent, fair and accourtable,

NOW, THEREFORE, in accordance with Article 55(1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows.