The Government changed its financial sources for its supplementary budget to domestic borrowing, following international development partners’ reluctance to inject the money as promised.
In its 14th regular session held on Thursday, June 10, 2021, The House of Peoples’ Representatives (HPR) unanimously approved a 26.4 billion birr supplementary budget for the current Ethiopian fiscal year, in addition to the 470 billion birr annual budget approved back in June 2020.
The motion presented before the House indicated that once the government’s plan to cover the supplementary budget from external sources bore no fruit, it reverted to domestic sources such as domestic borrowing, domestic revenue, external assistance and loans and credit.
“The government was unable to get the money from external partners as promised,” government whip, Chane Shimeka said while presenting the motion to the House.
Subsequently, in an effort to counterbalance the lack of financial injection from partners, the government has decided to cover the budget through domestic borrowing resources.
The budget endorsed by the House is mainly allotted to respond to the huge resource demanding situation in Tigray region following the war, Chane highlighted.
The budget earmarked is set to be used for drought mitigation, support of internally displaced people, COVID-19 protection, fertilizer subsidy, flooding response, and other related expenses, he explained further.
Thus, six billion birr for defense force expenses incurred during the law enforcement operation in Tigray, 9.3 billion birr for wheat procurement, two billion birr for COVID-19 protection and response, two billion birr for fertilizer procurement, 6.3 billion birr as contingency for government offices, 230 million birr for the safety-net program and 0.6 billion birr for capital budget has been budgeted.
It is to be recalled that in late 2020, the European Union (EU) suspended budgetary support to Ethiopia worth EUR 88 million (USD 107 million) until humanitarian agencies were granted access to people in need of aid in the northern region of the country.
“The latest supplementary budget is critically important to reach out to the people of Tigray as they are engulfed in economic destruction,” said State Minister of Finance and Economy, Eyob Tekaligne (PhD).
Despite endorsing the supplementary budget, MPs echoed their concerns and frustrations over the matter and expressed their worry that the injection might exacerbate the already inflated market, since the source of the money is fully from domestic sources.
However, Eyob affirmed to MPs that the government was cautious when it planned the supplementary budget and will be implemented with greater attention.
It is to be recalled that the Council of Ministers approved a 561.7 billion birr budget for the 2021/22 fiscal year, which shows an increment of 18 percent compared to the preceding fiscal year.