The Ethiopian federal government’s budget has seen a significant nominal increase in Birr over the past few years however, when calculated in U.S. dollars, the growth appears minimal.
Since 2013 E.C. the budget has expanded by 480 percent in local currency terms. Conversely, when adjusted to U.S. dollars, the growth rate is marginal, representing an increase of only 8 percent.
The disparity between the two currencies is stark the federal budget, which stood at 476 billion Birr in 2013 E.C., has ballooned to 2.3 trillion Birr for 2019 E.C.
A review of the growth trajectory since 2013 E.C. shows the following progression: 476 billion Birr in 2013, 561 billion in 2014, 786 billion in 2015, 801 billion in 2016, and 971 billion Birr in 2017.
This expansion continued with the budget approaching 1.9 trillion Birr in 2018 E.C, before reaching 2.3 trillion Birr for 2019 E.C.
In contrast, when measured in dollar terms, the budget has seen little movement, rising from 13.6 billion dollars in 2013 E.C. to just 14.9 billion dollars in 2019 E.C.
The 2.339 trillion Birr draft budget for the 2019 fiscal year was recently tabled before the House of People's Representatives. While the figure marks an increase over the 1.9 trillion Birr allocated in 2018, the dollar-denominated value remains largely unchanged.
Finance Minister Ahmed Shide, who presented the proposal, explained that the budget was designed to support the Homegrown Economic Reform agenda and insulate the national economy against potential shocks from conflict in the Middle East.
Of the total 2019 fiscal year budget 1.236 trillion Birr is earmarked for recurrent expenditure, 568.2 billion Birr for capital projects, 520.6 billion Birr for regional budgetary support, and 14 billion Birr for regional sustainable development initiatives.
The government projects a total federal revenue of 1.817 trillion Birr for the year with 1.6 trillion Birr expected to be generated from tax and non-tax sources.
Members of the House of People's Representatives acknowledged the significance of the budget in advancing national development goals and have referred the draft to the Standing Committee on Planning, Budget, and Finance for further scrutiny.
Ultimately, the widening gap between the Birr-denominated budget and its dollar equivalent is widely viewed as a reflection of persistent inflation and the eroding purchasing power of the national currency.
