ETHIOPIA

Highlights of the 2024/25

Federal Government
Budget Proclamation
KEY TAKEAWAYS

■ The approved federal budget for the 2024/25 fiscal year stands at ETB 971.2 billion, reflecting a 21.2
per cent increase compared to 2023/24. However, when adjusted for inflation, the real increase is
only 0.5 per cent.

■ Of the total approved budget, 75.6 per cent (ETB 734 billion) is allocated for federal government
expenditure, 22.9 per cent (ETB 222.1 billion) for regional governments, and 1.4 per cent (ETB 14
billion) is earmarked for supporting capital projects aimed at achieving the SDGs.

■ The federal budget allocation for capital and recurrent components in 2024/25 shows a slight change
compared to the previous year. Since 2022/23, the composition of the federal budget has shifted
towards higher shares for recurrent expenditure. This decline in growth-promoting capital expenditure
could adversely impact economic development.

■ Around 91.5 per cent of the approved budget is planned to be financed from domestic sources (58
per cent from domestic revenue and 33.5 per cent from domestic loans), while the remaining 8.5 per
cent is to be financed from external assistance (5.1 per cent) and external loans (3.4 per cent).

■ The government is heavily relying on domestic borrowing to finance its budget deficit, which may
have negative implications for the availability of credit to the private sector, and it will be inflationary
in the case of direct financing from the National Bank.

■ The three budget lines with the highest allocations are public debts, provisions, and the federal
government’s spending on education (not including regional government spending on education),
which account for ETB 139.3.2 billion (19 per cent), ETB 81.5 billion (11.1 per cent), and ETB 79.8
billion (10.9 per cent) of the federal government’s budget, respectively. The government has indicated
that the budget prioritizes debt repayment, mandatory government expenditures, the completion
of ongoing projects, fertilizer subsidies, productive safety nets, and the rehabilitation of damaged
infrastructure and services.

■ Around 32 per cent of the federal budget is allocated to what the government considers pro-poor
sectors (namely education, health, road construction, water and energy, and agriculture). The share
of budget allocated for these sectors has been declining since 2022/23. Although the federal
government executes only a portion of the national budget allocated for these sectors, the decline in
the share allocated by the federal government for these sectors indicates the stress on government
finances, with concerning implications for social service delivery that will have a direct bearing on the
welfare of children, human capital development, and economic development.
1. BACKGROUND AND CONTEXT
The federal government of Ethiopia approved The budget formulation was based on key
a federal budget of Ethiopian Birr (ETB) 971.2 assumptions about major macroeconomic
billion for the 2024/25 Ethiopian fiscal year (EFY), indicators, along with government priorities and
effective from 08 July 2024 to 07 July 2025. policy direction. The economic growth rate for
The budget consists of capital and recurrent 2024/25 is forecasted to be 8.4 per cent.1 The
expenditure for execution by the federal plan aims to reduce inflation from 26.6 per cent2
government, general-purpose grants (non- to 20.6 per cent in the coming fiscal year through
earmarked block grants or subsidies) to sub- tight fiscal and monetary policies. This projected
national regional governments, and additional inflation rate is lower than IMF’s inflation forecast
capital budgets allocated to regions for achieving of 18.2 per cent for 2025.3 The value of goods
the Sustainable Development Goals (SDGs). imported, a key factor in forecasting government
Internal conflict and climate shocks, along with revenue from customs duty and taxes, is
macroeconomic instabilities such as high inflation, projected to increase by 9 per cent.
pressure on the external balance of payments,
foreign currency shortages, a low tax-to-GDP ratio, It is also emphasized that increasing domestic
and a high debt burden, were major challenges resource mobilization is crucial for ensuring the
in the past fiscal year. Despite these challenges, budget’s reliability and sustainability. To achieve
the GDP growth for the 2023/24 fiscal year is this, tax policy and administration reforms will be
estimated at 7.9 per cent. implemented. This includes the implementation
of the Medium-Term Revenue Strategy, which
The presentation of the federal budget for encompasses revising the VAT tax proclamation
the 2024/25 Ethiopian fiscal year highlighted and the excise tax system. Significant emphasis
that the Ethiopian economy currently faces will also be placed on improving tax administration
macroeconomic instability, including high inflation, in the upcoming fiscal year. On the expenditure
foreign exchange shortage, a high public debt side, the budget prioritizes debt repayment,
burden, and low domestic resource mobilization. mandatory government expenditures, the
To adjust these macroeconomic imbalances, completion of ongoing projects, fertilizer subsidies,
the government has started implementing the productive safety nets, regional budget support,
second phase of the Home-Grown Economic and the rehabilitation of damaged infrastructure
Reform plan. The reform plan is built on four and services.
major pillars: ensuring macroeconomic stability;
improving the investment and trade environment; Following the budget announcement, a number of
increasing production capacity, productivity, and macroeconomic reform measures were introduced
competitiveness of sectors; and strengthening the in Ethiopia at the end of July 2024, which is part
government’s implementation capacity. of the framework for the second phase of the
Home-Grown Economic Reform plan and the Mid-
During the presentation of the budget, it was term Investment and Development Plan (MDIP)
indicated that the intended macroeconomic supported by the International Monetary Fund
reform primarily aims to ensure sustainable (IMF), the World Bank, and other development
and inclusive economic growth by controlling partners. Loans secured from international finance
inflation; improving the balance of payments and institutions have a budget support element that
addressing the foreign exchange shortage; as will be used to supplement the budget already
well as improving debt management and fiscal approved by the parliament for 2024/25. While
sustainability. Priority actions also include reducing attempts were made to incorporate these
direct advance by the government and increasing latest budget adjustments to this analysis,
participation of the private sector to ensure a a further refinement of the supplementary
sound public debt structure. budget, especially between the federal and

1
The IMF forecasts a GDP growth rate of 6.5 per cent for 2025. [International Monetary Fund. Regional economic outlook. Sub-Saharan Africa: a tepid and pricey recovery. Washington, DC:
IMF, Apr. 2024.]
2
Average general inflation rate for the fiscal year ending June 2024 from Ethiopian Statistical Service Statistical Bulletin: Inflation Report on June, EFY 2016. Issue No. 12/2016.
3
International Monetary Fund. Regional economic outlook. Sub-Saharan Africa: a tepid and pricey recovery. Washington, DC: IMF, Apr. 2024.

Highlights of the 2024/25 Federal Government

1
Budget Proclamation
regional allocations, is yet to take place post the key strategic directions to ensure the efficient and
parliament’s approval of the supplementary budget effective implementation of the macroeconomic
in October 2024, and has therefore not allowed reform programme. Some of the key objectives and
us to reflect the supplementary budget amount goals of the macroeconomic reform programme
as part of this analysis. The major macroeconomic are correcting foreign exchange distortions
policy measures introduced include establishing a and the balance of payments deficit, reducing
market-based foreign exchange regime; an interest- inflation through monetary policy, addressing debt
based monetary policy framework; fiscal policy vulnerability, increasing domestic revenue, and
reforms; development finance opportunities and strengthening the financial sector.
government debt management reform; as well as

2. FINANCING SOURCES OF THE

BUDGET
The federal budget approved by the House ■ ETB 49.1 billion (5.1 per cent of the total
of Peoples’ Representatives of the Ethiopian budget) is forecast to be obtained from external
parliament for the 2024/25 fiscal year is ETB 971.2 sources in the form of loans.
billion. This has increased by 21.1 per cent in
nominal terms compared with the original budget ■ ETB 32.9 billion (3.4 per cent of the total
approved for the EFY 2023/24. With the projected budget) is in the form of grants/assistance from
inflation rate of 20.6 per cent for the 2024/25 fiscal bilateral and multilateral development partners.
year, the real value of the budget increased by
only 0.5 per cent. The approved federal budget is For the fiscal year 2024/25, domestic revenue
financed from both domestic and external sources. is projected to rise by 17.5 per cent compared
Domestic sources mainly comprise tax, non-tax, to the budgeted amount for 2023/24. The share
capital revenue, and domestic borrowing, while of the budget financed from domestic revenue
external sources are borrowing and assistance in has decreased from 59.8% in 2023/24 to 58% in
the form of grants from development partners. 2024/25. On the other hand, domestic borrowing
The budget deficit is expected to be 2.1 per has increased from ETB 242 billion to ETB 325.6
cent of GDP. This deficit is planned to be covered billion, with its share from total federal budget
through acquiring ETB 242.0 billion from domestic rising by 4 percentage points. The government
borrowing and ETB 39.0 billion from external loans. is increasingly relying on domestic borrowing
Over 90 per cent of the approved budget is to be to finance its budget deficit. During the budget
financed from domestic sources (domestic revenue presentation, it was noted that domestic borrowing
and domestic borrowing). will utilize financial instruments such as treasury
bills and medium-term government bonds, which
are not expected to create inflationary pressure. The
■ ETB 563.6 billion (58.0 per cent of the total amount of direct advance from the National Bank of
budget) is planned to be mobilized from Ethiopia (NBE), which contributes to high inflation,
domestic revenue. is anticipated to decline significantly. The amount
of financing from external loans has increased from
■ ETB 325.6 billion (33.5 per cent of the total ETB 39 billion to ETB 49.1 billion, while external
budget) is intended to be mobilized from assistance has declined from ETB 41.1 billion to
domestic borrowing. ETB 32.9 billion.

Highlights of the 2024/25 Federal Government

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Budget Proclamation
 Figure 1:
1200
Sources of finance for the federal
1000 971.2 budget, 2020/21–2024/25 (in billion ETB)
32.9
49.1
786.6 801.7
800
41.1
38.9
39.0
42.8 325.6

600 561.7
266.1
242.0 Source:
476.0 68.9

400
45.5
48.1
56.9
Ministry of Finance (MoF)
66.8
77.9

563.6
Real values are calculated by the
438.9 479.5
200
304.6
369.1 authors, with 2020/21 as the base year.

0
2020/21 2021/22 2022/23 2023/24 2024/25

Domestic revenue Domestic loans External loans

External assistance Total (nominal value) Total (real value)

For the 2024/25 budget year, the share of tax 8 per cent in 2024/25. It is important to note that
revenue as a proportion of the total federal budget the sources of financing presented below pertain
is 52 per cent, showing a decline of 3 percentage only to the federal budget. Besides the general-
points from the previous fiscal year (Figure 2). The purpose grants (also referred to as non-earmarked
share of non-tax revenue increased from 5 per block grants or subsidies) provided by the federal
cent to 6 per cent. Meanwhile, the proportion of government to sub-national regional governments,
domestic loans in the total federal budget has risen regions also generate their own revenues and use
from 30 per cent to 34 per cent. On the other hand, the total resource envelope to plan their budgets,
the contribution of external assistance and external which are approved by their respective autonomous
loans has declined from 10 per cent in 2023/24 to regional parliaments.

Figure 2:
2023/24 2024/25 Share of financing
sources of the total
federal budget, 2023/24
30
34 and 2024/25 (per cent)

55 52
5
Source: MoF
5 3
5
5
6

Tax revenue External assistance Domestic loans

Non-tax revenue External loans

Highlights of the 2024/25 Federal Government

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Budget Proclamation
3. FEDERAL BUDGET ALLOCATION
Of the total approved budget, 75.6 per cent (ETB governments has increased by 4 per cent compared
734.5 billion) is allocated for federal government to the last fiscal year. The budget for supporting
expenditure, 22.9 per cent (ETB 222.7 billion) for the achievement of SDGs at the sub-national level
regional governments, and 1.4 per cent (ETB 14 remains at ETB 14 billion. The significant increase in
billion) earmarked for supporting capital projects the total federal budget is primarily due to a rise in
aimed at achieving the SDGs at the sub-national the capital and recurrent expenditures of the federal
level (Figure 3). The nominal budget for federal government (28 per cent), whereas the sub-national
government spending has increased by 28.1 per government subsidy showed a relatively lower rate
cent, while the allocation for block grants to regional of increase (4 per cent).

Figure 3:
1200
Federal budget allocation trends,
1000
2020/21–2024/25 (in billion ETB)
971.2

14
800 787 802
222.7
14 14

209 214
600 562
Source: MoF
476 12
451.3
400
6
370.1
Real values are calculated by
204 345
176
the authors, with 2020/21 as the
162
200 133 base year.
283.2
184 218 203.4
160
0
2020/21 2021/22 2022/23 2023/24 2024/25

Capital expenditure Recurrent expenditure Subsidies to regions

SDG support to regions Total budget (nominal value) Total budget (real value)

3.1. Federal government budget

Of the ETB 734.5 billion allocated to be executed by allocations for debt servicing, and humanitarian
the federal government, ETB 451.3 billion (61.4 per aid to communities affected by conflict, drought,
cent) is allocated for federal recurrent expenditure and other shocks. The share of capital budget has
and ETB 283.2 billion (38.5 per cent) for federal shown a declining trend starting from 2020/21.
capital spending (Figure 4). Within the federal The capital budget’s share of the total federal
recurrent budget, 28.2 per cent is designated budget increased from 35.5 per cent to 38.6 per
for wages and salaries, while 71.8 per cent is for cent between 2023/24 and 2024/25. This capital
operational expenditures. Compared to the previous budget will primarily be used for constructing
year, the federal government’s recurrent budget roads and social service delivery infrastructure, as
has increased by 21.9 per cent, and the capital well as for the reconstruction and rehabilitation of
budget has risen by 39.2 per cent. The increase infrastructure and facilities damaged by conflict.
in the recurrent budget is primarily due to higher

Highlights of the 2024/25 Federal Government

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Budget Proclamation
 Figure 4:
100 Federal government
budget by capital and
80
45.4 46.9 recurrent expenditures,
61.3
64.5 61.4
60 2020/21–2024/25 (per
cent of total federal
40 budget)
54.6 53.1
38.7 35.5 38.6
20
Source: MoF
0
2020/21 2021/22 2022/23 2023/24 2024/25

Capital expenditure Recurrent expenditure

The three budget lines with the highest allocations the principal and interest of external loans. The
are public debts, provisions, and education, second highest expenditure is provisions, mainly
accounting for ETB 139.3 billion (19 per cent), ETB a contingency budget for salary and operating
81.5 billion (11.1 per cent), and ETB 79.8 billion expenses. Compared to the previous fiscal year,
(10.9 per cent) of the federal government’s budget, the share of debt financing from the federal budget
respectively (Table 1). The budget for roads ranks decreased from 27.8 per cent in 2023/24 to 19
fourth with a 10.2 per cent share. Within the per cent in 2024/25. Although the share of the
public debt budget, 54.5 per cent is allocated for budget allocated for debt repayment has declined
paying the principal and interest of internal loans, compared to 2023/24, public debt remains the
while the remaining 45.5 per cent is for paying highest expenditure in the federal budget.

Table 1: Allocation and share of the federal government budget by sector, 2023/24 and 2024/25

Actual values Share from federal budget

Difference
2023/24 2024/25 2023/24 2024/25 in share
(ETB billion) (ETB billion) (per cent) (per cent)
Public debts 159.2 139.3 27.8 19.0 -8.8
Provisions 47.3 81.5 8.3 11.1 2.8
Education 55.8 79.8 9.7 10.9 1.2
Roads* 68.4 75.0 11.9 10.2 -1.7
National defence 50.0 65.7 8.7 8.9 0.2
Transfer 27.4 57.2 4.8 7.8 3.0
General services 41.1 52.3 7.2 7.1 -0.1
Health 22.6 33.9 3.9 4.6 0.7
Urban development* 12.7 29.7 2.2 4.0 1.8
Justice and security 18.0 27.6 3.1 3.8 0.7
Water and energy 19.5 25.3 3.4 3.4 0.0
Agriculture and rural development 21.6 23.0 3.8 3.1 -0.7
Prevention and rehabilitation 8.7 11.9 1.5 1.6 0.1
Transport and communication 9.6 11.9 1.7 1.6 -0.1
Others** 11.7 20.3 2.0 2.8 0.8

Notes: *‘Roads’ and ‘Urban development’ are jointly categorized as ‘Urban development and construction’ in
the federal government budget classification. **‘Others’ is composed of budget for organs of state; culture
and sport; mining; and labour and social affairs.

Source: MoF

Highlights of the 2024/25 Federal Government

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Budget Proclamation
3.2. Federal subsidies (non-earmarked block grants) to regional
governments
Every fiscal year, the federal government allocates the total federal budget is mainly due to higher
budget subsidies to regional governments based on recurrent and capital expenditures to be executed
a formula developed by the House of Federation. by the federal government. The decline in the
Recent trends show that the nominal value of the real value of the budget allocated to sub-national
budget allocated to regions has increased by 4 governments negatively impacts social service
per cent between 2023/24 and 2024/25 (Figure delivery, as a larger share of expenditure for these
5). However, in real terms, the budget’s value services is borne by sub-national governments.
has decreased by 13.7 per cent. The increase in

Figure 5:
Federal government subsidies to regions in nominal and real terms, 2020/21 2024/25 (in billion ETB)

250 223
214
204 209
200 176

150
153

100 118
95 82
50

0
2020/21 2021/22 2022/23 2023/24 2024/25

Nominal value Real value

Source: MoF
Real values are calculated by the authors, with 2020/21 as the base year.

Of the total budget allocated to the regions, ETB and South Ethiopia regions – which were all part
74.9 billion is allocated to Oromia. Amhara, Somali, of the former SNNPR – the House of Federation
South Ethiopia, Tigray, and Central Ethiopia regions has not revised the regional budget allocation
receive ETB 46.9 billion, ETB 21.7 billion, ETB formula. Instead, the allocation for these regions
15.2 billion, ETB 13.1 billion and ETB 12.8 billion, is done by proportionally distributing the budget
respectively (Figure 6). The Central Ethiopia and previously designated for SNNPR. This has placed
South Ethiopia regions were newly established increasing pressure on these new regions, as a
in the 2023/24 fiscal year following the split of significant portion of their budget is consumed by
the former Southern Nations, Nationalities and the recurrent costs of establishing new regional
Peoples’ Region (SNNPR). Despite the creation of structures, leaving fewer resources for the delivery
the Sidama, South West Ethiopia, Central Ethiopia, of social services.

Highlights of the 2024/25 Federal Government

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Budget Proclamation
Figure 6: Trends of federal subsidies across regions, 2023/24–2024/25 (in billion ETB)

80
74.9
70

60

50 46.9

40

30
21.7
20
15.2 13.1 12.8
8.9
10 6.7 6.6 5.5
4.0 2.9 1.9 1.7
0
ia

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2023/24 2024/25

Source: MoF

3.3. Support for implementation of the SDGs in regions

The federal government has been providing will be transferred to regional states as per the
additional budgetary support to regions to help grant formula for implementing the SDGs, which
achieve the SDGs. According to the 2011/12 FY is equivalent to the amount allocated in 2023/24.
proclamation, this support for capital expenditure However, although the nominal allocation remains
is to be used for financing specific sectors the same, the real value of the budget has declined
that are agreed upon by the MoF and regional by 17.1 per cent in 2024/25 compared to 2023/24
governments. The budget is intended to be due to high inflation in the economy. Figure 7
allocated to poor and vulnerable groups in society presents the allocation of the SDG grant across
to ensure equitable service delivery and access to regions for the 2024/25 fiscal year.
productive resources. In 2024/25, ETB 14 billion

Highlights of the 2024/25 Federal Government

7
Budget Proclamation
Figure 7: SDG grant allocation across regions, 2024/25 (in billion ETB)

6.0

5.0 4.8

4.0

3.0
3.0

2.0
1.4
1.0 0.8 0.8
1.0
0.6 0.4 0.4
0.3 0.2 0.1 0.1
0.0
ia

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Be
Source: MoF

4. FEDERAL ALLOCATIONS TO SECTORS

OF FOCUS
The federal budget shows only the resources The federal government budget allocation for
that are allocated across sectors at the federal selected sectors – education, health, water and
government level. At the regional level, the energy, agricultural and rural development, and road
resource envelope encompasses federal subsidies construction – has shown an increasing trend in
and resources mobilized within the regions. The nominal terms over the years, except for 2023/24
total regional budget is then allocated between (Figure 8). For 2024/25, the budget allocated to
sectors by the regions themselves for sub- these sectors has increased by 26.1 per cent in
national level implementation. The sector budget nominal terms compared to 2023/24. In real terms,
analysis in this section focuses on the budget to the increase is 4.6 per cent. Among the sectors,
be implemented by the federal government only. the largest increases were in health, education, and
This understates the overall budget allocated for water and energy, with budget increases of 50 per
each sector, as the sub-national governments also cent, 43 per cent, and 29 per cent, respectively. The
allocate and execute budgets for these sectors, allocations for road construction, and for agricultural
data for which is not yet available. and rural development, also rose, by 10 per cent
and 6 per cent, respectively.

Highlights of the 2024/25 Federal Government

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Budget Proclamation
 Figure 8:

250 Federal budget allocation to

237.0
selected sectors, 2020/21–
33.9
193.6
2024/25 (in billion ETB)
200 190.0 187.9
171.8 25.3
20.4 19.3
22.6
19.4 17.6 24.7
19.5
23.0 Source: MoF
150 18.5
21.5 18.5
15.3
21.6 Real values are calculated by
79.8
100 66.1
the authors, with 2020/21 as
64.8 55.8
56.8 the base year.

50
75.0
58.8 67.5 66.3 68.4

0
2020/21 2021/22 2022/23 2023/24 2024/25

Road construction Total (real value) Total (nominal value)

Agriculture and rural development Education

Health Water and energy

In terms of budget share, 32.3 per cent of the agricultural and rural development, have declined
federal budget is allocated to these priority sectors by 1.7 and 0.7 percentage points, while the share
in 2024/25 (Figure 9). The share allocated to these for water and energy has remained the same. The
sectors has shown a decline over the years, total share allocated to these priority sectors has
dropping from 58.5 per cent in 2020/21 to 32.3 per slightly declined from 32.8 per cent in 2023/24
cent in 2024/25. Within the federal government to 32.3 per cent in 2024/25. It should be noted
budget for 2024/25, 10.9 per cent is allocated for that this analysis understates the overall budget
education, 10.2 per cent for road construction, allocated for each sector at national level, especially
4.6 per cent for health, 3.4 per cent for water and for education and health, as the sub-national
energy, and 3.1 per cent for agricultural and rural governments manage most of Ethiopia’s education
development. Compared to 2023/24, the budget and health budgets, while the federal government is
shares for education and health have increased by mainly responsible for higher education and tertiary
1.2 and 0.7 percentage points, respectively. On the health services.
other hand, the shares for road construction, and

Highlights of the 2024/25 Federal Government

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Budget Proclamation
Figure 9:
70.0
Share of the federal budget
allocated to selected sectors, 60.0
58.5
55.0
2020/21–2024/5 (per cent) 6.6
5.9
50.0
7.3
5.1

Source: MoF 40.0

5.2 5.4
34.4
32.8 32.3
3.4
30.0 3.9 4.6
19.3 19.1 4.4
3.4
3.3 3.4
3.8 3.1
20.0
11.5 9.7 10.9

10.0 20.0 19.5

11.8 11.9 10.2

0.0
2020/21 2021/22 2022/23 2023/24 2024/25

Road construction Education

Agriculture and rural development Water and energy

Health Total

The federal budget allocated to food security and net declined by 13 per cent. The budget allocated
safety nets has been increasing over the years as a share of total federal government budget is
in nominal terms. It rose from ETB 22.4 billion in 2.4 per cent in 2024/25, down from its value of
2023/24 to ETB 23.3 billion in 2024/25, marking 2.8 per cent in 2023/24. Despite fiscal constraints,
a 4.1 per cent increase (Figure 10). This overall the government increased its budget allocation
increase is attributed to a 21.5 per cent rise in the for safety nets. However, this increase was
urban food security and safety net component. insufficient to counteract inflation and bring about an
In contrast, the rural food security and safety net improvement in the real value of the budget.
component declined by 10.3 per cent. In real terms,
the total budget allocated to food security and safety

Figure 10:

25
Federal budget allocated
22.4
23.3 to food security and
safety nets, 2020/21–
20 19.0
2024/25 (in billion ETB)
17.1
11.0
15 12.3

12.1 10.3
Source: MoF
9.5
10
7.2
12.3
5 10.1
7.6 8.7
4.9
0
2020/21 2021/22 2022/23 2023/24 2024/25

Urban Total nominal value

Rural Total real value

Highlights of the 2024/25 Federal Government

10
Budget Proclamation
The increase in the nominal budget allocation for in 2023/24 to ETB 10.5 billion in 2024/25. On the
social protection is to be mainly financed from other hand, the contribution from foreign assistance
external assistance. As can be seen from Figure is expected to increase from ETB 11.8 billion (52.5
11, the government treasury contribution to food per cent) in 2022/23 to ETB 12.8 billion (54.8 per
security and safety net programmes decreased cent) in 2024/25. The inability to raise safety net
from 47.5 per cent in 2023/24 to 45.2 per cent in spending from the treasury reflects the growing
2024/25. The amount in absolute terms has also fiscal strain on the economy.
slightly declined by 1 per cent, from ETB 10.6 billion

Figure 11:
Share of the federal
100 2.1
budget allocated to
16.3
29.3 food security, 2020/21–
80
52.5 54.8 2024/25 (per cent)
37.6 59.2
60
36.5
40 Source: MoF
46.1 47.5 45.2
20 34.2 38.7

0
2020/21 2021/22 2022/23 2023/24 2024/25

Treasury External assitance External loan

5. FEDERAL GOVERNMENT BUDGET

CREDIBILITY
Budget credibility is measured as the proportion 2022/23, the total federal budget credibility was
of actual expenditure at the end of the fiscal year 96 per cent. Regarding the budget components,
out of the budget that was approved at the start credibility was 100 per cent for the recurrent
of the fiscal year. For a budget to be an effective budget, while it was 89 per cent for the capital
instrument, it needs to be credible. In this regard, budget. Disruptions to capital projects caused by
budget credibility analysis for the period 2018/19– conflicts and other shocks across the country have
2022/23 reveals that the variation between the led to underutilization of federal capital budgets.
total amount of federal expenditure and the total Additionally, delays in procurement and shortages
federal budget that was originally approved was of foreign currency needed for capital investments
on average around 7 per cent (Figure 12). For are key factors contributing to this lower utilization.

Highlights of the 2024/25 Federal Government

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Budget Proclamation
Figure 12:
Federal government budget 160 151

credibility, 2018/19–2022/23 140

(per cent)
120
107 108
100
100 94 96
92
Source: 84
89 86 87 89

80 75
72
MoF 70

60

40
Note:
Expenditure data used 20

to calculate the budget 0

credibility is taken from MoF’s 2018/19 2019/20 2020/21 2021/22 2022/23

Fiscal Policy Department.

Total budget credibility Capital budget credibility Recurrent budget credibility

As part of the budget credibility assessment, what was originally forecast. This is due to the
planned federal domestic revenue is compared impact of conflict, along with other multiple shocks
to the actual domestic revenue collected by the that impacted domestic resource mobilization
federal government. During the period 2018/19 to performance. The credibility improved in 2022/23
2022/23, on average 90.3 per cent of the planned due to relative stability in the country. Since tax
federal domestic revenue was collected by the comprises around 80 per cent of overall federal
end of the fiscal year (Figure 13). The revenue domestic revenue, maintaining an effective tax
performance compared to what was planned at policy and further improving its implementation
the beginning of the fiscal year was the lowest along with tax compliance and tax administration
in 2021/22. There was an underperformance in are essential to maintain the improvement in federal
domestic resource mobilization, with a 16 per domestic revenue mobilization.
cent shortfall in revenue collection compared to

Highlights of the 2024/25 Federal Government

12
Budget Proclamation
 Figure 13:

100.0 Performance of federal

92.4 92.8 92.2
90.1 government domestic
90.0
84.0 revenue: actual federal
80.0 domestic revenue
collected as a percentage
70.0
of planned federal
60.0 domestic revenue,

50.0
2018/19–2022/23

40.0

30.0

20.0
Source:
MoF
10.0

0.0
2018/19 2019/20 2020/21 2021/22 2022/23

Highlights of the 2024/25 Federal Government

13
Budget Proclamation
Annex 1: Timeline for the State budget process in EFY 2017
(2024/25)
Planning/Budgeting cycle Ethiopian fiscal year Gregorian Calendar

Planning cycle

1. Macro-Economic and Fiscal Framework (MEFF) By Tahisas 30 By 08 January

1.1 MEFF preparation Until Hidar 30 Until 09 December

1.2 MEFF approval By Tahisas 30 By 08 January

2. Notification of the three-year subsidy estimates By Tir 01 By 09 January

3. Preparation of the annual fiscal plan By Tir 15 By 23 January

Budgeting cycle

A. Pre-preparation of budget by public bodies

1. Pre-preparation of budget Before Yekatit 01 Before 08 February

2. Notification of annual subsidy By Yekatit 01 By 08 February

3. Issuing the budget call By Yekatit 01 By 08 February

4. Budget requests By Megabit 15 By 24 March

5. Preparation of the draft recommended budget Megabit 15–Ginbot 15 24 March–23 May

6. Review of the recommended budget by the

Ginbot 16–Ginbot 25 24 May–02 June
Council of Ministers

B. Budget approval

7. Legislative approval and appropriation of the

Sene 01–Sene 30 08 June–07 July
budget

C. Implementation 80,686.08 132,945.31

8. Notification of approved budget Hamle 01–Hamle 07 08 July–14 July

9. Accepting the approved budget and action plan

Hamle 08–Hamle 30 15 July–06 August
preparation

10. Implementing the approved budget Hamle 01–Sene 30 08 July–07July

Highlights of the 2024/25 Federal Government

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Budget Proclamation
This federal government-level budget brief was produced by Fanaye Tadesse Techane
[email protected] with guidance and contributions provided by Zeleka Paulos
[email protected]. The main objective of this budget brief is to synthesize complex
budget and expenditure information so that it is easily understood by stakeholders,
to foster discourse, and to inform policy and financial decision-making processes.
The analysis presents budget and expenditure that are recorded on-budget by the
Ministry of Finance.

For further information, contact:

Daniel Kumitz
Chief of Social Policy
UNICEF Ethiopia
[email protected]

© United Nations Children’s Fund (UNICEF), Ethiopia, 2024

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