Ethiopia to boost budget 20 percent

Ethiopian Minister of Finance and Economic Development (MoFED) presented to the Parliament a 20 percent national budget increment (1.5 billion USD) for the coming fiscal year (July 8, 2010 to July 7, 2011).  

After looking into the details, parliament is set to approve the proposed budget in the coming few weeks. Ethiopia’s budget for the previous fiscal year 2009/10 (July 8, 2009 to July 7, 2010) was around 56 billion birr.

According to the draft budget Sufian Ahmed, Minister of MoFED presented to the Parliament yesterday (June 10, 2010), the total budget of the country for the coming fiscal year is 77.2 billion birr (around 5.7 billion USD at current exchange rate).

Government plans to fill 13 billion birr budget deficit by borrowing from local finance sources and external project loans. According to Sufian, as the share of local loan is at 1.7 percent of the Gross Domestic Product (GDP), it will not have a negative impact on loan provision to other sectors and will assist the inflation rate at an acceptable level.

Out of the total proposed budget of the country around 36 billion birr is allocated for capital budget, which is planned to be spent on various development activities in economic and social areas.

Around 13 billion birr is allocated for construction of new roads and upgrading the existing ones, while over 8 billion birr is planned to be spent on education mainly introducing new programs in government higher education institutions and completing the construction of ten universities.

Agriculture and health sector of the country will also get 5.4 billion birr and around 3 billion birr respectively while 2.4 billion birr allocated for planned water development activities.

MoFED has also requested the Parliament to approve one billion birr budget from government pocket for expansion of electricity in the country.

Of the total budget of the country regional states will get 23.5 billion birr, which exceeds the previous year budget by 4 billion birr.

When it comes to spending of government institutions for the coming 12 months, Revenue and Customs Authority’s budget is increased by 79 percent from last year.

The budget of Ministry of Transport and Communications is also increased by 60.5 percent while the Textile and Leather Industry Development Center has increased by 60.2 as compared to the previous fiscal year 2009/10 (from July 8, 2009 to 7, 2010). Defense budget of the country is also increased by 10 percent compared to last year and reached 4.5 billion birr.

Strengthening capacity of the tax collection authority is mentioned as one of the reasons for increasing its budget to 309.3 million birr from 172.7 million birr. In his budget speech, Sofian indicated that the tax collection performance of the authority has been improved over the past few years.

In the past ten months, the authority has collected a total of 35.7 billion birr from taxation, of which 6.7 billion birr is collected from non-tax incomes.