Proposed 2 trillion Birr budget represents 12 percent drop in USD terms
The Council of Ministers has referred a record two trillion Birr federal spending bill to Parliament for approval.
The proposed budget for 2024/25 is more than double the 971.2 billion Birr lawmakers approved last June, but represents a significant cut in dollar terms. At current exchange rates, the proposed budget is approximately USD 15 billion, down from an estimated USD 17 billion last year, not including the 582 billion Birr supplementary budget approved in November.
Analysts who have crunched the numbers say the share allocated to priority sectors, like education and health, has been declining, even as nominal budgets have ballooned over the year. The massive spending bill has also aggravated concerns about Ethiopia’s widening fiscal deficit.
Two months ago, MPs grilled Minister of Finance Ahmed Shide over the impacts of the budget deficit on regional administrations and capital projects.
“There is no money now. We’ve also seen projects, including those awarded to foreign contractors, stopping due to a lack of funding for compensation,” said Debebe Admassu, an MP and member of the parliamentary committee for Budget and Finance Affairs.
The Minister told lawmakers the deficit stands at 139 billion Birr this year, and argued the problems are an outcome of the government’s attempts to balance between budget deficit financing and containing inflation.
As of May 2025, the government had taken 57 billion Birr in direct advances from the National Bank of Ethiopia (NBE), down from 157 Billion birr last year.
Still, concerns about sustainability arise, especially in light of hiccups in tax collection. In April, officials at the Ministry of Revenues reported they had managed to collect less than 518 billion Birr (86 percent) of the 600 billion Birr expected over the first half of the financial year.
The statement issued by the Council of Ministers on Thursday (June 5) does not indicate how much the administration is planning to allocate to capital expenditures, nor does it provide a sectoral breakdown.
The new fiscal year will begin on July 8, 2025.
