Ethiopia Proposes Budget to Hit $14.7bn

Ethiopia’s government has proposed a record budget of 2.34 trillion birr, equivalent to about $14.7 billion, for the 2026/27 fiscal year, with officials citing increased costs linked to the ongoing conflict involving Iran and its impact on global energy markets.

Finance Minister Ahmed Shide told lawmakers that the spending plan represents a significant increase from the current fiscal year’s budget of 1.92 trillion birr. He said the higher expenditure largely reflects costs arising from the Middle East crisis, although he did not provide a detailed breakdown of those expenses. Ethiopia has increased fuel subsidies since the conflict began as authorities seek to cushion the impact of rising energy costs on consumers and businesses. 

The proposed budget was approved by the Council of Ministers and forwarded to parliament for consideration. According to government statements, the spending plan will fund recurrent expenditures, capital projects, subsidies for regional governments and programmes linked to the Sustainable Development Goals. 

Despite the increase in spending, the government projects a budget deficit of 1.4 percent of gross domestic product, lower than the 2.2 percent deficit forecast for the current fiscal year. Officials also expect the economy to grow by 10.1 percent in the coming fiscal year. 

The budget proposal comes as Ethiopia continues negotiations with creditors over the restructuring of its $1 billion Eurobond and broader debt obligations. Finance Minister Ahmed Shide said discussions with some creditors were progressing, although no final agreement has been announced.

The parliament is yet to approve the budget and no date has been announced for the final vote.

SOURCE: Reuters