July 19, 2024

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2025 budget

Ethiopia’s 2025 Budget Aims for Growth Despite Inflation and Debt

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At its 31st regular meeting, the Ethiopian House of Peoples’ Representatives listened to the 2025 capital and regular draft budget statement presented by the Ministry of Finance. Minister Ahmed Shide detailed the 2025 draft budget speech to the council. The federal government’s budget for the 2025 fiscal year totals 971.2 billion birr, representing a 21.1% increase compared to the previous year.

The minister presented a detailed breakdown of the budget, highlighting a regular budget of 451.3 billion birr and a capital budget of 283.2 billion birr. Furthermore, the minister emphasized that 14 billion birr has been allocated to regional governments to support sustainable development initiatives, and 236.7 billion birr has been allocated for the budget support of national regional governments.

The Minister of Finance allocates the largest portion of the federal government’s budget (46.5%) to the regular budget. Specifically, the government allocates 127.2 billion birr (28.2%) of the budget for regular expenses, and the remaining amount of 324.1 billion birr is allocated for operations. The government focuses on lowering its debt burden, making it possible for the minister to allocate a substantial portion of the budget to the regular budget.

The minister revealed that 139.3 billion birr from the regular budget allocation has been set aside for debt repayment. Of this amount, 54.8% is designated for domestic debt payments, while the remaining 45.2% will be used for foreign debt obligations.

Moreover, the minister emphasizes that the high inflation rate poses significant challenges to the economy’s growth, thereby exerting substantial pressure on the lives of citizens. He urges everyone to contribute to addressing this issue.

The federal government’s capital budget for 2025 is 283.2 billion birr. This budget will be funded through the following sources:

216.5 billion birr from the treasury and internal revenue generated by government offices

39.8 billion birr from project assistance

26.9 billion birr from project loans

The minister of finance provided this breakdown of the capital budget’s funding sources.

The federal government’s capital budget for 2025 allocates 187.1 billion birr to priority areas, including roads, education, agriculture, and irrigation, drinking water and sanitation, and health, as well as rural and urban development.

Members of the House of Representatives emphasized the need for the ministry to allocate sufficient funds to restore infrastructure, education, health, and electricity services in war-affected regions.

So, the government has provided 20 billion birr from its treasury loan to restore and establish property and service facilities damaged during the war.

The proposed draft budget has been sent to the Standing Committee on Planning, Budget, and Finance for review and consideration.

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