Tax-Benefit Microsimulation: Feasibility Study Ethiopia

Abstract

The purpose of this study is to assess the feasibility of building a microsimulation model of the Ethiopian tax and benefits system. We first provide a detailed description of the tax and benefits system of the country. This includes qualifying criteria, tax brackets, and exemptions. We then describe household survey datasets available in the country and examine the nature of these datasets in terms of representativeness, completeness, and panel data structure. Finally, we provide assessments for whether each tax and benefits system can be microsimulated given the rules and the nature of the data available.

COVID‐19 pandemic in Ethiopia: Socioeconomic impacts and government recovery measures

“…The model is calibrated using the 2015/16 Social Accounting Matrix (SAM) for Ethiopia (Mengistu et al, 2019). The SAM comprises annual economic transactions structured around 61 economic activities (11 of which account for households as home producers), 71 marketed commodities (and 23 home commodities) and 28 household groups — see SAM structure in Boulanger et al (2019) and Nechifor et al (2020).…”

“…Furthermore, Ethiopia has been recently hit by multiple internal and external shocks, including droughts, the COVID-19 pandemic, domestic conflict, and felt the impacts of Russia's war in Ukraine on global prices. For all these reasons, external debt interest payments as a proportion of the government revenues have risen to almost 5% of general government revenue while total external debt service payments as a percentage of government revenues increased between 2015-19 and 2020-22 reaching almost 20% (African Development Bank, 2023. Public debt is estimated to remain high and countries' such as Ethiopia could experience difficulties in accessing international capital markets, combined with limited revenue mobilisation.…”