One of the principal objectives of the developing countries is to accelerate the pace of social andrneconomic development. However, the over all effort to achieve this development objective hasrnremained an elusive and difficult task. This is so partly due to lack of financial resources,rnproblems of resource allocation and inefficient utilization of the resources in the public sector.rnEffective and efficient public e:o.:penditure management has remained to be one of the seriousrnproblems often encountered by the sector bureaus of Tigray regional government. The corernessence of the problem lies in the way the strategic and annual plans are formulated, the differentrncomponents of budgets are allocated and utilized, physical and financial pelformances arernevaluated and reported as well as inefficiencies related to systems of monitoring and control.rnThis study attempts to analyze the case by considering the performance of the Tigray RegionrnAgriculture and Rural Development Bureau and Education Bureau based on Modified CashrnBased Accounting System introduced since 2003. Accordingly, the analysis in this studyrncovered, among others, resource allocation between recurrent and capital budget by source ofrnfinance, the pattern of expenditure in relation to the priorities expressed in the 3-5 years strategicrnplan of the sector spanning the period 2003-2006 as well as the effectiveness and efficiency ofrnauditing and procurement procedures and systems in place.rnThe study revealed that the execution capacity of capital budget for both sector bureaus has beenrnlow during the period under review. Moreover, in both sector bureaus, the financial managementrnsystem especially with respect to off setting budget allocated from loan and assistance andrnregional and federal governments lacked clear and transparent reporting system. As a result, thernreport on budget utilization does not reflect the actual budget utilized during a fiscal year, as itrndoes not capture the expenditure components related to loan and assistance provided in cash orrnin kind or by way of technical assistance from donors.rnV IIIrnInformation gap on the budget approved at the federal level, lack of qualified human resource andrnthe absence of effective intemal audit function are among the factors for the constraints in thernexecution of capital budget and prevalence of weak financial management.rnStrengthening the management information system, arrangement of local and foreign trainingrnfor building the capacittJ of staff, ensuring participatory approach during the preparation ofrnannual plans and working with higher government officials for possible arrangement onrninformation flow with respect to approved and released budget are the major recommendations ofrnthe study.rnKey te1'11ts: Strategic Planning, Source of Finance, Medium Te1'1n ExpenditurernManagement, off Budget Fund, Cost Center