Ethiopia has approved a 2026/27 federal budget worth 2.339 trillion birr (about $14.5 billion), marking an increase from the previous year’s allocation of 2 trillion birr. The budget is designed to support national investment priorities, fiscal reforms, and medium-term development planning as the country continues its economic transformation agenda.
The approved spending plan covers recurrent expenditures, capital investments, transfers to regional governments, and programs aligned with the Sustainable Development Goals. Authorities stated that the budget was prepared in line with Ethiopia’s broader development and investment strategy, as well as a medium-term macroeconomic framework running through 2031.
Despite strong growth projections, with the International Monetary Fund estimating expansion at 9.3% for the fiscal year and government forecasts reaching 10.2%, the economy continues to face structural challenges. These include inflationary pressure, external imbalances, and the long-term economic impact of past conflict and debt stress, including the 2023 sovereign default.
In response, Ethiopia has been implementing wide-ranging macroeconomic reforms since 2024, including a shift toward a market-based exchange rate system, monetary policy modernization, and gradual liberalization of external account restrictions. These reforms are supported by financing and policy guidance from the International Monetary Fund and the World Bank, alongside debt restructuring efforts under the G20 Common Framework.
The newly approved budget is also part of a longer-term fiscal strategy aimed at stabilizing public finances, attracting investment, and improving growth sustainability. It will now be submitted to the House of People’s Representatives for final approval, reinforcing the government’s focus on institutional reform and economic restructuring over the coming years.
