Ethiopia’s cabinet has endorsed a historic 2 trillion birr (~US$15 billion) budget for the 2025/26 fiscal year, reflecting a 31% increase from the previous year.
This surge in public expenditure underscores the government’s strategic focus on national security, economic productivity, and disaster response amid growing domestic and regional challenges.
The record budget will now be submitted to the House of People’s Representatives for parliamentary debate and final approval. If passed, it would mark Ethiopia’s largest ever fiscal commitment—aimed at stimulating inclusive growth, addressing macroeconomic pressures, and enhancing institutional resilience.
Ethiopia’s 2025/26 Budget Surges 31% to Bolster National Stability and Growth
A substantial portion of the proposed spending will be allocated to strengthening national defence and internal security, signalling the government’s response to persistent instability and geopolitical tensions. Additionally, significant funding will support agricultural productivity, infrastructure development, and key public services.
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The new budget also introduces enhanced measures for disaster relief and climate resilience, including provisions to respond to droughts and floods that have affected millions. This reflects the administration’s growing recognition of the economic risks posed by climate change.
With this move, the Ethiopian government seeks to balance security imperatives with the need to stimulate economic expansion and safeguard vulnerable communities. The proposed fiscal policy aligns with the country’s 10-Year Development Plan and ongoing IMF-supported reform efforts.
Ethiopia Targets Defence and Productivity in Ambitious $15B Budget Plan
Experts view this expansionary budget as a bold yet necessary step to stabilise and revitalise Ethiopia’s economy in the face of mounting inflation and external shocks.
As the proposal moves to parliament, domestic and international observers will be watching closely to assess implementation and long-term impact on Ethiopia’s fiscal health.
