Africa-Press. The Ethiopian government announced that it expects to increase public spending to approximately 2.34 trillion birr (14.7 billion USD) during the fiscal year 2026-2027, which begins next month, compared to 1.92 trillion birr for the current fiscal year, marking the largest budget the country has seen to date.
Ethiopian Finance Minister Ahmed Shide stated before parliament that the increase in spending is primarily due to costs associated with the war on Iran and its economic repercussions, noting that the government has had to increase fuel subsidies since the outbreak of the crisis due to rising global energy prices.
Despite the significant rise in expenditures, the government expects the budget deficit to decrease to 1.4% of GDP during the upcoming fiscal year, compared to 2.2% in the current year, indicating the continuation of the fiscal discipline policy implemented by Addis Ababa as part of the economic reform program supported by international institutions.
The government is betting on continued strong economic performance, expecting a growth rate of 10.1% in the coming year, a level close to the growth recorded this year. Additionally, export revenues during the first ten months of the current fiscal year reached 8.7 billion USD, with expectations to rise to 10.5 billion USD by the end of the year.
Export performance is particularly significant amid ongoing negotiations for restructuring external debts, especially the international bonds valued at one billion USD. Negotiations faced a setback last month after several bondholders rejected the latest government offer for restructuring, while some creditors threatened legal action against the Ethiopian government.
The increase in Ethiopian spending is part of a broader wave affecting sub-Saharan African economies due to the impacts of the war on Iran, which has led to rising fuel and fertilizer prices and increased pressure on government budgets, at a time when many African countries are struggling with high debt burdens and limited fiscal space to address external shocks.
