figure for 2006/07). Recognising this growing contribution of tax revenues to the national budget, the CRM examined the soundness and degree of openness of tax policy formulation and implementation. This was done largely through interactions with tax payers and other stakeholders. 360 It was noted that tax policy formulation and implementation are quite transparent and broadly understood as such by taxpayers at the federal and regional states levels, as well as by professional associations and civil society. This is attributable to the fact that, when tax policies are determined, they are clearly spelled out in the Federal Government Proclamation, the Negarit Gazeta, and in the budget statement (Federal and Regional States), so that taxpayers know the direction of government in this regard. However, the CRM expressed concern over the declining percentage of tax revenue in the national budget (Table 5). Table 5 – Public Finances (percentage of GDP at current prices) 1999/2000 2004/05 2005/06 2006/07 2007/08 2008/09(e) 2009/10(p) Total revenue and grants 17.4 19.0 18.9 17.7 17.2 18.0 16.8 Tax revenue Grants 10.1 11.7 4.3 11.0 4.2 10.3 5.0 10.3 4.3 10.4 5.0 10.0 4.2 Total expenditure and net lending 26.7 23.3 21.4 20.3 19.8 18.1 Current expenditure 21.3 12.5 11.8 10.0 9.7 9.2 9.0 Excluding interest 19.4 11.5 11.0 9.3 9.3 8.4 8.1 Wages and salaries 5.1 5.6 6.2 5.5 5.4 4.9 4.6 Interest Capital Expenditure Primary balance Overall balance 1.9 5.3 -7.4 -9.3 1.0 10.7 -3.4 -4.4 0.8 10.9 -3.1 -3.9 0.7 10.7 -3.0 -3.7 0.5 10.4 -2.6 -3.1 0.8 10.4 -1.0 -1.8 1.0 9.1 -0.3 -1.3 22.8 Source: Ministry of Finance and Economic Development data: estimates (e) and projections (e) based on author’s calculations Debt Management Strategy 361 In line with the fiscal consolidation objective, GoE continues to forge ahead with a strategy to reduce external indebtedness and maintain a sustainable debt framework. Having benefited from the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), and coupled with reduced external loan disbursements, the total debt stock of Ethiopia, as a percentage of GDP, dropped to 11.8 percent in 2006/07 from 46.6 percent in 2005/06 (Figure 3). - 151 -