Ethiopia’s economy is expected to expand more swiftly in the fiscal year to July 2023 but the budget deficit will rise, Finance Minister Ahmed Shide told parliament on Tuesday.
The nation of 115 million has been one of the world’s fastest-growing economies in the past 15 years, boosted by heavy infrastructure investment, but the COVID-19 pandemic and a conflict that has now subsided slowed expansion in the past two years or so.
Ahmed said in a budget speech that the economy was expected to grow by 6% to 7% in the 2021/22 fiscal year, down from a previous forecast of 8.7%, and by 9.2% in 2022/23.
Last week, the cabinet approved total spending for 2022/23 of 786.6 billion birr ($15.2 billion), a 16.6% rise from the previous year.
Ahmed said the budget was forecast to record a deficit in 2022/23 of 231.4 billion birr, or 3.4% of gross domestic product compared with a government predicted deficit of 2.7% in 2021/22.
To plug the deficit, the government would borrow 224.5 billion birr domestically and the rest from external sources, Ahmed said.
“This budget deficit is higher than previous years and that is due to the current condition of our country where covering essential expenses is a must,” he said, without elaborating.
Fighting erupted in Ethiopia’s northern Tigray region in November 2020, extending to neighboring regions last year, hitting state economic programs and deterring foreign investors. The federal government declared a unilateral humanitarian ceasefire in March.
Some spending would be used on rebuilding infrastructure and services damaged in the conflict, Ahmed said.
($1 = 51.6684 birr) (Reporting by Dawit Endeshaw Writing by George Obulutsa Editing by James Macharia Chege and Edmund Blair)
Good job and excellent news!!! For those of you bigots we have made a habit of getting up in the morning with your recital ‘Oromumma this and Neftegna that’ and reciting the same before you go to bed every night, this is really very bad news for you. The old country, that gem of the gem of the colored is telling you to jump in the lake and never come up! It is going to be around alive and kicking. Kicking your lazy A$$, I may add. You have been telling everyone that it is done, it is gone asunder. How about crawling back to where you came from and eating your crow?
Meanwhile, I would like to take a moment to thank this patriot countryman H.E. Obbo Ahmed Shide for his extremely valuable service to the country we all left behind and still keep tucked close to our hearts.