to 5 years) has been used in the PASDEP to illustrate the broad financing and affordability implications of the Plan. Institutional Arrangements 379 The CRM notes that Ethiopia’s legal and administrative infrastructure does enhance effectiveness in public financial management. Fiscal linkages between the Federal Government and the Regional States are well developed and articulated, and the fiscal mandates of key agencies well defined in the various Proclamations. There are also sound guidelines facilitating effective domestic revenue mobilisation, budgeting, disbursement and accounting at federal and regional state levels. The Ministry of Finance and Economic Development, the Revenue and Customs Authority (RCA), and the Office of the Accountant General (OFAG) are sufficiently coordinated in the management of public finances. Audit (both by internal auditors and by the office of the Accountant General) and the Budget and Finance Affairs committee oversight functions are also well developed. 380 The CRM notes that, despite well developed institutional arrangements, a number of challenges remain that may prevent institutions from performing as effectively as they otherwise would. • The lack of a medium to long-term planning horizon – beyond PASDEP - that is sufficiently synchronised with medium- to long-term budget projections; • While the Ministry of Finance and Economic Development is responsible for recurrent and capital budget allocation, the House of the Federation is responsible for allocation to the regions based on the statutory formulae; and, • Oversight functions are impaired by the lack of institutional capacity for research and in-depth interrogation both in the Federal Parliament and Regional State Assembly Finance and Budget committees. Revenue Administration 381 Ethiopia should be commended for developing and implementing a sound tax framework, with a well developed legal aspect. The main pieces of legislation relate to the Value-Added Tax and Turnover Tax Proclamation of 2003, rationalisation of the Excise Tax laws, introduction of the Tax Identification Number (TIN). The introduction of turn over tax on those who are not eligible to VAT is intended to preserve the neutrality of the tax system and augment revenue - 158 -