One of the most crucial challenges to Ethiopia’s fiscal federalism is the inability of the states tornraise, retain and manage revenue. Revenue bases at state level being small and unpredictablernand resource problems that most states have create a problem in performance of theirrnexpenditure responsibilities. As a result, State and sub national governments are extremelyrndependent on the federal government’s grant even to cover their budgets. Interestingly, while arnlot has been written about Ethiopian fiscal federalism, not much attention is paid to its possiblerneffects on the application of the right to secession. Beginning with an evaluation of the currentrnfiscal set up and the right to secession under the federal constitution, this study examines howrnthe Ethiopian fiscal federalism impacts the possibility of application of the right to secession.