Ethiopian Ministers Approve Nearly 600 Billion Birr Additional Budget

A 581-billion-birr additional budget bill to cover recurrent expenditures and adjust overall spending was approved by the Council of Ministers on Thursday morning. The draft bill forwarded to the House of People’s Representatives looks to realign expenditure targets with the Medium Term Macroeconomic & Fiscal Framework.

The Council also approved the four-year framework stretching from 2024-2028 earlier in the morning before pushing the additional budget bill towards Parliament.

Parliament ratified the country’s biggest budget bill of 971.2 billion birr in early July, before the recent macroeconomic reforms that entailed the floating of the Birr. When Finance Minister Ahmed Shide presented the budget at that time, he stated that he foresaw a steady exchange rate for the year while IMF discussions were ongoing. 

However, this has not materialized. The Birr has since depreciated by more than 100% against the US dollar, falling from around 57 birr per dollar on July 28 to just over 120 birr this week.

While the National Bank of Ethiopia (NBE) has been implementing a tighter monetary policy to meet inflation targets, the floating of the Birr has necessitated a realignment of costs.

With the central bank significantly reducing direct lending to the government over the past year, tax revenue targets have been revised upward to nearly 1.5 trillion birr. Additionally, several state-owned enterprises have increased their fees over the past four months, raising the cost of services ranging from telecommunications to passport issuance.