Ethiopia Unveils Record 1.93 Trillion Birr Citizens’ Budget to Power Post-War Recovery and Growth













Addis Ababa — Ethiopia’s Ministry of Finance has released a record-breaking 1.93 trillion birr ($33.7 billion) national budget for the Ethiopian Fiscal Year (EFY) 2018 (July 2025–June 2026), marking a bold pivot toward post-war reconstruction, macroeconomic reform, and long-term sustainable growth. The “Citizens’ Budget,” a simplified public-facing version of the official plan, aims to demystify government finances and invite Ethiopians into a conversation about how the country’s money is raised and spent.

Growth Targeted at Nearly 9% Despite Inflationary Pressures

The government projects real GDP growth of 8.9%, up from a preliminary 8.4% last year, while seeking to bring inflation down from 13.9% to 11.9%. Imports are forecast to climb to $21.3 billion, while the fiscal deficit is expected to narrow to 1% of GDP, nearly halving from 2.06%.

Officials argue these numbers reflect confidence in Ethiopia’s Homegrown Economic Reform agenda—an ambitious program to move from a state-led model to a more market-driven economy. “It is stability today and prosperity for tomorrow,” the Ministry said, underscoring planned reforms such as exchange-rate flexibility and state-owned enterprise restructuring.

Filling the Revenue Gap: Tax Reforms and Loans

To fund the plan, the government projects 1.93 trillion birr in revenues, drawing from domestic taxes, non-tax revenues, development-partner grants, and concessional loans. A suite of tax policy reforms is set to expand Ethiopia’s fiscal capacity:

15% VAT and excise tax on fuel,

new property tax proclamation for regional cities,

motor vehicle circulation tax, and

amendments to withholding income tax and the minimum alternative tax.

Where revenue falls short, Addis Ababa will rely on long-term, low-interest external loans and direct budget support from development partners.

Capital Spending Priorities: Roads, Schools, and Post-War Rebuilding

The biggest capital investments target Ethiopia’s infrastructure and human development needs:

Roads: 58 billion birr for new road construction, 26.9 billion birr for upgrades, and 4.2 billion birr for maintenance.

Education: 40.7 billion birr for higher education, 360 million birr for technical and vocational training, and 3.4 billion birr for quality improvements.

Irrigation & Agriculture: 17.1 billion birr for irrigation projects and 1.2 billion birr for pastoral-area research.

Health: 18 billion birr to expand and improve health systems, including 6.6 billion birr for maternal and child health and 4.4 billion birr for vaccination programs.

In a nod to Ethiopia’s fragile post-conflict landscape, 10 billion birr has been earmarked for post-war rehabilitation, including the restoration of infrastructure and services.

Safety Nets and Regional Support

The budget reinforces Ethiopia’s flagship Productive Safety Net Program, allocating 48.7 billion birr for rural food security and 24.1 billion birr for urban safety nets. Regional subsidies total 314.8 billion birr, with Oromia and Amhara receiving the largest shares, while 14 billion birr is dedicated to advancing the Sustainable Development Goals (SDGs).

Transparency as a Reform Pillar

The “Citizens’ Budget” is designed not just as a fiscal blueprint but as an exercise in inclusive governance. By translating complex financial data into plain language, the Ministry of Finance seeks to give citizens and civil society a clear view of how public resources are mobilized and spent—fostering trust and reducing corruption risks.

The ministry has paired these efforts with digital financial management platforms and stricter auditing, ensuring public funds are tracked and that Parliament can hold the government accountable.

Ethiopia’s Balancing Act

For Ethiopia, the stakes are high. The government must juggle ambitious growth targets, the need for inflation control, and the fiscal discipline required to avoid unsustainable debt. The success of the 2025/26 Citizens’ Budget will depend on how quickly tax reforms are implemented and whether private investment flows in as planned.

Why It Matters: Ethiopia’s budget signals a confident economic pivot after years of conflict and global shocks. For investors, development partners, and citizens alike, it’s a roadmap that seeks to convert today’s stability into tomorrow’s prosperity—if the government can execute on its ambitious promises.