Ethiopia banking on spending and growth
Sunday June 11 2023
A view of Addis Ababa, Ethiopia. PHOTO | THOMAS IMO | NMG
Ethiopia’s overall spending is expected to rise slightly and economic growth to accelerate in the next fiscal year starting in July, finance minister Ahmed Shide said on Thursday.
Mr Ahmed said in a budget speech to be presented to parliament that overall spending would rise to 801.65 billion birr ($14.7 billion) in the 2023/24, from 786.61 billion birr in 2022/23.
Ethiopia’s fiscal year runs from July 8 to July 7.
The impacts of the Covid-19 pandemic, a two-year war in the northern Tigray region and droughts, floods and locust invasions in parts of the country are still being felt by the economy, which also experienced foreign-currency shortages.
Ahmed said the economy was forecast to grow 7.9 percent in 2023/24 from an estimated 7.5 percent in 2022/23.
“In the next couple of years, the economy will be free from (this) chaos and will be fully healthy,” he added.
Freed from chaos
The budget deficit is expected to be 281.05 billion birrs in the coming year. A 2022/23 deficit of 231.4 billion birr was projected at last year’s budget speech.
"There are plans to cover the deficit by getting about 39 billion birrs from foreign loans and 242 billion birrs in domestic borrowing," Ahmed added.
Ethiopia requested in early 2021 a debt rework under the Group of 20’s Common Framework, an initiative for restructuring government debt aimed at low-income countries. Progress was complicated by the war in Tigray.
“Even though we hoped that the G20 framework opportunity would bring meaningful change on debt treatment, it wasn't quickly implemented, and it remains to be our next homework,” Ahmed said.