This report describes the current structure of fiscal policies in the forestry sector in Ethiopia. Because of the federal system of government, it is not easy to present information about total revenue collection and public expenditure in the whole of the country, but the report presents information at the federal level and from a selection of states. Overall, it is believed that the amount of revenue collected is higher than public expenditure in the sector. The report describes how some states are introducing innovative financing mechanisms such as auctioning harvesting rights, revenue sharing and revenue retention by the forestry administration. It also shows that charges collected from the production of NWFPs are very important in the country. Finally, it presents a number of recommendations about how the current situation of low revenue collection might be improved and suggests some more general policy reforms.