Ethiopia’s federal government has tabled a 2.339 trillion-birr budget proposal for the 2019 E.C (2026/2027) with a strong push to raise tax revenue as external financing declines.
During its 56th regular meeting, Ethiopia’s Council of Ministers approved and submitted the proposed federal budget for review and approval by the House of People’s Representatives.
The draft shows total revenue and grants projected at 1.817 trillion birr for 2019, up 20 Percent from 1.511 trillion birr in 2018. This increase is mainly driven by tax revenue, which is expected to rise from 1.099 trillion birr to 1.491 trillion birr—a 36 Percent increase. Meanwhile, non-tax revenue is projected to decline from 129.4 billion birr to 120.4 billion birr (down 7 Percent) while external grants fall from 282.4 billion birr to 204.8 billion birr (a 27 Percent decrease).
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To meet the higher revenue target, the draft includes tax measures expected to generate an additional 78.97 billion birr. This includes 22.56 billion birr from reducing income tax exemptions, 33.85 billion birr from improving excise tax administration, and 22.56 billion birr from tightening customs duty exemptions.
Total expenditure in the draft budget rises to 2.339 trillion birr, up 21.3 Percent from the 1.928 trillion birr allocated in the previous year’s budget. Recurrent expenditure increases from 1.061 trillion birr to 1.237 trillion birr, while capital expenditure rises more sharply from 415.2 billion birr to 568.2 billion birr—an increase of 36.8 Percent Regional subsidies will increase from 437.1 billion birr to 520.6 billion birr (up 19.1 Percent) while SDG-related spending remains unchanged at 14 billion birr.
In a combined breakdown of federal recurrent and capital spending totaling 1.8047 trillion-birr, debt servicing accounts for the largest share at 542.1-billion-birr (30 Percent followed by budget support transfers at 238.1-billion-birr (13.2 Percent) Education will receive 158.2 billion birr (8.8 Percent) while road infrastructure has been allocated 123.8 billion birr (6.9 Percent)
The draft budget projects a financing gap of 522.7 billion birr, which will be covered through 329 billion birr in domestic borrowing and 193.7 billion birr in external loans.
