Ethiopia's record Birr 2.34 trillion budget sparks debate amid rising economic hardship
via The Reporter Ethiopia7 min read
The Ethiopian federal government has proposed a record Birr 2.34 trillion approximately USD 14.85 billion budget for the 2026/2027 fiscal year, a significant increase from the previous year. Finance Minister Ahmed Shide presented the plan, which anticipates a 10.1 percent economic growth rate. However, despite these figures, many Ethiopian citizens are experiencing severe economic hardship due to currency devaluation, aggressive tax collections, and skyrocketing administrative fees. The government's economic reforms, particularly the 2024 transition to a market-based exchange rate, led to a sharp devaluation of the Ethiopian Birr, increasing the cost of imported essentials and fueling inflation. To fund the budget, the state is relying on increased domestic tax mobilization and higher non-tax government fees, partly to meet IMF conditions for a loan. Over half of the budget, Birr 1.20 trillion, is allocated to recurrent expenditures, including external debt servicing and subsidies for fertilizer and petroleum. Capital infrastructure projects receive Birr 568.2 billion, and regional subsidies get Birr 520.6 billion, while only Birr 14 billion is allocated for regional Sustainable Development Goals and direct poverty alleviation. Critics argue the budget does not adequately address the immediate needs of the poor, advocating for measures like freezing or reducing non-tax government fees for low-income citizens, expanding direct cash transfer programs, and implementing tax relie
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This summary was AI-generated from a story originally published by The Reporter Ethiopia.
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