Ethiopia's federal government has unveiled a draft budget of 1.93 trillion birr for the upcoming 2018 E.C. fiscal year. The proposed budget, presented by Minister of Finance Ahmed Shide to the House of People's Representatives, is now undergoing parliamentary deliberation.
The proposed budget clearly lays out where the money will go, highlighting the government's key spending areas. A large portion, 1.2 trillion birr, is allocated for recurrent expenditures, which covers the day-to-day operations of the government. For development projects and infrastructure, 415 billion birr has been set aside as capital expenditures. Regional governments will receive 315 billion birr in direct support, and an additional 14 billion birr is specifically earmarked to help regions achieve their Sustainable Development Goals (SDGs).
Finance Minister Ahmed detailed the anticipated revenue sources to fund this ambitious budget. A significant 1 trillion birr, representing 73% of the total, is expected to come from tax revenue. International development partners are projected to contribute 236 billion birr, with the remainder of the funds generated from project support and various miscellaneous revenues.
Addressing fiscal health, the finance minister reported a gross budget deficit of 2.2% relative to the Gross Domestic Product, with the net deficit standing at 1%. The minister assured lawmakers that the government intends to cover this deficit through the sale of treasury bills rather than direct borrowing from the National Bank.
He underscored the government's commitment to "strict monetary and fiscal policies," emphasizing a strategy to align government spending with national income. This approach, he explained, is crucial for stabilizing inflation and fostering efficient budget utilization.
The minister further elaborated that the 2018 draft budget is comprehensively structured to support ongoing macroeconomic reforms and align with the nation's ambitious 10-year guiding development plan. Looking ahead, the government forecasts an 8.9% economic growth rate for the 2018 E.C. fiscal year.