Among the factors that enable to promote development includerna well preformed development plan generating and mobilizingrnresources proper allocation of these resources, particuarly rnthe allocution of financial resources among investment(capital) rnand consummation ( recurrent), and an efficient utilization of the rnmeager resources that can be mobilized from external and domoesticrnsources.rnIn Ethiopia,a tremendous growth in budgetary expenditure hasrnbeen observed at the same time, this increase in goverrunentrnexpenditure has been going to the recurrent and from it a greaterrnproportion to the non-productive sectors , such as defence andrnto sustain and run the state machinery. This has been accompeniedrnby a large deficit in the budget of the goverrunent.rnThe objective of this study is to find out the factors that arernconsideed to be responsible to bring about the tremendous grouthrnin Government. expenditure and also to assess reasons for thernallocation of Government fund among alternative proforemanse Tornmeet this end , stepwise regression analysis is employed. Thisrnis further reported by additional analysis of factors like instirntitutionsons and procedures in expenditure allocation As the rncase is in the highly developed and least developed countries ,rnGoverrunent expenditure in Ethiopia also was affected more byrnnon-economic factors. however, different components of expenturernbehaved differently.rnFinally various suggestions are forwarded to mitigate the existing mitigate proble. even though recommendations to increase revenue by tax rnare to be suported, particular consideration should be made on thernrole of the Government in promoting; socio-economic development andrnthe allocation of expenoiture among alternative programs. The Governmentrncan not: continue depending; on foreign sources and defiicitfinancingrnas the major and permanent sources of financing its expenditurernwith out causingf'.sover consequences to the over all developmentrnof the country