In December the Ethiopian Revenues and Customs Authority (ERCA) announced that it had collected birr11bn (US$764m) in tax and nontax revenue in the first quarter of the 2010/11 fiscal year (year ending July 7th). This amounts to around 20% of total budgeted revenue for 2010/11 and is birr1bn behind target for the first quarter. Despite the shortfall, the ERCA said that it has made progress in tracking down birr382m (US$26.5m) in unpaid debts and back taxes. The ERCA has also been aggressively pursuing tax dodgers through the courts, filing over 500 criminal and civil cases. To date it is estimated to have won over 180 of these, resulting in payments and often jail time for offenders.

Overall the ERCA aims to boost domestic revenue from 8.5% of GDP in 2009/10 to 11% of GDP in 2010/11-an ambitious target. It blamed a concentration on administrative tasks during the first quarter for the shortfall, and says that remaining revenue collection targets for 2010/11 will be met. Its chances are good, particularly as revenue will benefit from a new windfall tax introduced by parliament in November on bank profits resulting from the large devaluation of the birr in September (September 2010, Economic performance). Under the legislation, banks are required to pay a 75% windfall tax on all such profits calculated based on banks' net foreign-exchange gains on August 31st which, it is estimated, will add around birr1.5bn (US$83m) to government coffers this year. By end-2010 six banks had already made windfall tax payments of birr794m. Unsurprisingly, the state-owned Commercial Bank of Ethiopia (CBE) paid the largest amount (birr286m), while Awash International and Wegagen Bank are the largest private-sector players. Despite this windfall, the Economist Intelligence Unit expects the budget deficit as a percentage of GDP to edge slightly higher, from 1.7% in 2009/10 to 2.8%, in 2010/11 owing to a proposed public-sector pay rise.