1. http://www.fassil_tassew@hotmail.com
The problem of absence of allocation of resources during the period of Pagume can
be explained and discussed in a number of ways. To reveal the problem using facts is
useful. The undiscovered personal income tax revenue trend shows that as the
period of Pagume increases the UPIR also increases (please refer to the following
figure).
F i g ure 1: U nd i s c o verd P ero nal Inc o me T ax R evenue i n mi l l io ns o f B i rr D uri ng t he P eri o d o f P ag ume
25
Birr
20
15
10
5
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year 1984=1...1998=15
As we observe from the figure that during initial period (1984-1989EC) the UPITR trend
is about horizontal line. However, since the 1989, the UPITR has observed with a general
upward slopping trend line. When we referred these periods they were the years in which
Ethiopia’s Economy exhibits an average growth rate of the economy was about 11 %.
Therefore as Ethiopia’ economy performance improved, on the other hand the problems
of resource allocation and distribution during the Pagume period worsened. Since,
government has to borrow money from either the internal or external sources to finance
activities during Pagume. Suppose the government borrows money from external sources,
one can think how the trend of Ethiopia’s debt increases more than the trends of the
UPITR.

2. For example, in the year 1998 the value of undiscovered personal income tax revenue
during Pagume amounted about 20 million Birr. Suppose the government borrowed such
money from the external sources at interest rate of 16%. So the repayment of such
borrowed money amounted about 23.2 million Birr.