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Addis Planning More Spending, Growth Next Fiscal Year

FILE: Ahmed Shide, Ethiopian Finance Minister. Photo taken Aug. 17, 2018

ADDIS ABABA - Ethiopia's overall spending is expected to rise slightly and economic growth to accelerate in the next fiscal year starting in July, its finance minister said on Thursday.

Ahmed Shide, in a budget speech to be presented to parliament, sets forth that overall spending would rise to 801.65 billion birr ($14.7 billion) in the 2023/24 year, from 786.61 billion birr in 2022/23.

The East African country's budget deficit is expected to be 281.05 billion birr in the coming year. A 2022/23 deficit of 231.4 billion birr was projected at last year's budget speech.

Ethiopia plans to cover the deficit by getting about 39 billion birr from foreign loans and 242 billion birr in domestic borrowing, Ahmed added.

Ethiopia's next fiscal year runs from July 8, 2023 to to July 7. 2024

Ahmed said the economy was forecast to grow 7.9% in 2023/24 from an estimated 7.5% in 2022/23.

"In the next couple of years, the economy will be free from (this) chaos and will be fully healthy," Ahmed said.

Ethiopia requested in early 2021 a debt rework under the Group of 20's Common Framework, an initiative for restructuring government debt aimed at low-income countries. Progress was complicated by the war in Tigray.

"Even though we were hoping that the G20 framework opportunity would bring meaningful change on debt treatment, it wasn't quickly implemented and it remains to be our next homework," Ahmed said.

The impacts of the COVID-19 pandemic, a two-year war in the northern Tigray region and droughts, floods and locust invasions in parts of the country are still being felt by the Ethiopian economy, which has also experienced foreign-currency shortages.

In April, four sources told Reuters that Ethiopia was in talks with the International Monetary Fund (IMF) to borrow at least $2 billion under a reform program.