Ethiopia's 2.34 trillion Birr federal budget for 2026/27 faces parliamentary scrutiny
via The Reporter Ethiopia17 min read
Ethiopia's Parliament reviewed a proposed 2.34 trillion Birr federal budget for the 2026/27 fiscal year, a 21 percent increase from the current year. The record budget, approved by the Council of Ministers, drew criticism from lawmakers regarding the executive's optimistic economic outlook amidst challenges like inflation, unemployment, and a growing tax burden. Finance Minister Ahmed Shide defended the proposal, highlighting ongoing economic reforms. The budget allocates 1.2 trillion Birr for recurrent spending, 570 billion Birr for capital spending, and over 520 billion Birr for regional subsidies. Nearly 43 percent of the recurrent budget is for debt service, with significant portions also for fuel and fertilizer subsidies, and civil servant salaries. Debt service accounts for almost a third of the entire federal budget. In contrast, education receives less than nine percent, health six percent, and defense 5.3 percent. The budget projects 1.8 trillion Birr in revenue, implying a deficit of over 500 billion Birr, largely to be covered by domestic borrowing. Lawmakers raised concerns about disproportionate allocations, particularly for new regional states, and the decision to exclude new major infrastructure projects. Finance Minister Ahmed Shide acknowledged the government's inability to fund all new capital projects, stating that many will be financed in the future. He clarified that a large portion of recurrent spending is for debt service, subsidies, and defense, not so
Free daily or weekly digest of the most important stories from across 18 African countries. No spam, unsubscribe any time.
This summary was AI-generated from a story originally published by The Reporter Ethiopia.
Must ReadThe US State Department has announced visa restrictions on leaders of the Tigray People’s Liberation Front TPLF and their immediate family members. This decision comes as tensions between TPLF hardliners and the Ethiopian government threaten to reignite conflict in northern Ethiopia, potentially undermining regional peace and security. The US government statement highlighted that military forces loyal to the TPLF, referred to as the “Tigray Security Forces,” engaged directly with the Ethiopian National Defense Force ENDF earlier this year, jeopardizing the fragile peace established after the November 2022 war. The visa restrictions target individuals responsible for or complicit in undermining the resolution to the crisis in the Tigray region. The State Department also noted that the TPLF and the unilaterally reinstated Tigray regional council recently unveiled draft legislation described by opposition parties and rights advocates as a “blueprint for totalitarian control.” This proposed legislation includes mandatory mobilization, expanded security powers, a new media regulatory regime, and a central command structure led by the regional president. Hundreds of thousands of civilians have already fled their homes in northern Ethiopia due to fears of renewed conflict.
Must ReadThe African Union has welcomed a newly signed peace agreement between the United States and Iran, describing it as a significant diplomatic breakthrough. The deal, signed in France by US President Donald Trump and Iranian counterpart Masoud Pezeshkian, aims to end the war between their countries. Both nations have committed to further talks to finalize the agreement within 60 days. Key aspects of the initial deal include pledges to reopen the Strait of Hormuz, a USD 300 billion reconstruction package for Iran, and assurances that Washington will lift "all types of sanctions" on Iran. The agreement does not address Iran’s nuclear program, which analysts expect to be part of future negotiations. Mahmoud Ali Youssouf, chairperson of the African Union Commission, stated that the accord is an important step toward ending hostilities and fostering long-term stability in the Middle East, highlighting the power of dialogue and diplomacy. Youssouf praised the parties for their engagement and acknowledged the roles of Donald Trump, as well as the mediation efforts of Pakistan, Oman, and Qatar.
Must ReadThe United States has announced over $1 billion in humanitarian and disaster-response assistance, distributed through UNICEF and the World Food Programme WFP. Ethiopia is among more than 40 countries expected to benefit from this funding. The assistance aims to support food security, nutrition, health, water, sanitation, and other humanitarian programs for vulnerable populations affected by conflict, displacement, natural disasters, and other emergencies. Over $218 million will go to UNICEF, and more than $800 million to WFP. This funding is part of grants to trusted humanitarian partners and is intended to support life-saving operations. WFP welcomed the contribution, stating it will strengthen its capacity to respond to hunger crises and emerging emergencies globally. Ethiopia continues to receive support from UNICEF and WFP for food assistance, nutrition services, water and sanitation programs, and emergency responses for populations affected by conflict, drought, and displacement. This allocation is one of the largest US humanitarian funding announcements since a review of aid programs began after President Donald Trump's administration ordered a pause on foreign development assistance in January 2025, gradually resuming selected humanitarian assistance through international organizations.