Ethiopia’s cabinet has approved a record 2.34 trillion birr (US$14.5 billion) budget for the 2026/27 financial year, underscoring the government’s ambitions to sustain economic reforms, finance development priorities and support regional administrations.
The proposed budget, which represents the largest in the country’s history, was unanimously endorsed by the Council of Ministers on Tuesday and forwarded to parliament for final approval before the start of the new fiscal year on July 8.
According to a government statement, the draft budget amounts to 2.339 trillion birr, marking an increase of nearly 400 billion birr, or about 21 percent, compared with the 1.93 trillion birr allocated for the current 2025/26 fiscal year.
The government said the spending plan was prepared within the framework of Ethiopia’s recently approved medium-term macroeconomic and fiscal strategy covering the period from 2026 to 2030.
Officials said the framework reflects progress achieved through ongoing macroeconomic reforms aimed at stabilising the economy, improving fiscal management and laying the foundation for sustainable growth.
More Read
“The budget has been prepared based on the structural achievements registered through the comprehensive macroeconomic reform programme currently under implementation,” the Council of Ministers said.
Authorities said the proposed expenditure package is aligned with Ethiopia’s broader development agenda and supports priorities outlined in the country’s Ten-Year Perspective Development Plan.
The budget will be distributed across four major spending categories: recurrent government expenditure, capital investment projects, transfers to regional governments and programmes linked to the implementation of the United Nations Sustainable Development Goals (SDGs).
The government said spending requests submitted by ministries and public institutions were reviewed in line with their mandates, operational responsibilities and capacity to implement projects effectively.
Officials added that the budget seeks to balance development needs with fiscal sustainability while maintaining support for critical public services and infrastructure projects.
The increase comes as Ethiopia continues to pursue ambitious economic reforms designed to attract investment, strengthen private sector participation and modernise key sectors of the economy.
The East African nation has in recent years undertaken wide-ranging reforms, including changes to exchange rate management, fiscal policy and state-owned enterprise governance, as part of efforts to address economic imbalances and stimulate growth.
The government argues that these measures are beginning to yield results by improving economic stability and enhancing the country’s growth prospects.
The proposed budget is expected to support investment in infrastructure, social services, agriculture and industrial development, areas that remain central to Ethiopia’s economic transformation strategy.
More Read
Regional governments are also expected to receive significant allocations to finance local development programmes and public service delivery.
Economists say the substantial increase in public spending reflects both the government’s development ambitions and rising fiscal demands associated with a rapidly growing population and expanding infrastructure requirements.
However, some analysts caution that effective implementation and prudent debt management will be critical to ensuring that higher expenditure translates into sustainable economic gains.
The draft budget will now be considered by the House of People’s Representatives, Ethiopia’s lower chamber of parliament, which is widely expected to approve the proposal before lawmakers adjourn for recess.
If endorsed, the budget will take effect at the start of the 2026/27 fiscal year and become the largest public spending programme ever implemented by the Ethiopian government.
The move highlights Addis Ababa’s determination to maintain momentum behind its reform agenda while financing long-term development objectives despite a challenging global economic environment.
