The House of People’s Representatives of the Federal Democratic Republic of Ethiopia has approved an additional 582 billion birr federal government budget for the 2017 fiscal year. This decision was made during the House’s 6th regular session in its 4th year of office.
The additional budget is earmarked for several critical purposes, including the repayment of foreign and domestic debt, subsidies for essential social needs such as fertilizers, medicines, and edible oil, expansion of capital projects, social safety net programs, and government employee salary reforms. In presenting the budget, its proponents emphasized its necessity for the 2017 fiscal year.
Dr. Tesfaye explained that the increased budget was prompted by the rise in both domestic and foreign expenditures resulting from Ethiopia’s recent macroeconomic reforms.
Out of the total 582 billion birr supplementary budget, 393 billion birr is allocated for regular expenditures, 70 billion birr for capital projects, and 119 billion birr for expenditure adjustments.
During the session, members of the council raised several concerns and questions regarding the additional budget. Key issues included whether the supplementary budget was excessive, whether it could trigger inflation, and whether the collection of 282 billion birr in taxes to finance part of the budget might place undue pressure on taxpayers.
Responding to these concerns, Minister of Finance Ahmed Shide explained that the additional budget was proportionate to Ethiopia’s status as a developing country with a population of 120 million. He further stated that as the country’s economic growth accelerates, future fiscal years may require even larger budgets.
The Minister assured the parliament that the additional budget would be financed through a mix of domestic and foreign revenue sources and that it was intended to support low-income government employees and safety net beneficiaries. He emphasized that the budget was structured to avoid fueling inflation.
Following extensive deliberation, the council approved the supplementary budget bill for the 2017 fiscal year as Proclamation No. 1355/2017. The decision passed with three objections and five abstentions.
