Ethiopia Increases Budget to Tackle Economic Challenges

Ethiopian lawmakers have approved a significant budget increase for the 2024/25 fiscal year to address rising costs through subsidies and economic instability. This financial move follows a new IMF program and currency adjustments aimed at facilitating debt restructuring amidst recent adversities.

In a decisive move, Ethiopian lawmakers on Tuesday approved a substantial increase in government spending by an additional 581.98 billion Ethiopian birr, equivalent to $4.8 billion, for the 2024/25 fiscal year, as revealed by a live parliament broadcast.

This increase in expenditure, sanctioned by the cabinet last week, complements the previously announced spending of 971.2 billion birr. This adjustment represents a 21% hike compared to the prior fiscal year, indicating a strategic shift aimed at revitalizing the Ethiopian economy.

Finance Minister Ahmed Shide stated that part of the augmented budget would subsidize essential commodities like fertiliser, oil, fuel, and medicine, crucial for an economy striving to recover from several setbacks, including the COVID-19 pandemic, a destructive war in Tigray, and extreme weather challenges. The recent approval of a $3.4 billion IMF program and currency flotation has set the stage for the nation's much-needed debt restructuring efforts.

(With inputs from agencies.)