Sunday, May 26, 2024

Council approves second supplementary budget in four months

The Council of Ministers (CoM) has approved a 48-billion-birr fresh supplementary budget package, on Friday, which is to be the second in the past four months, as COVID-19 takes its toll on the already slowing down economy.

Once approved by the House of People’s Representatives (HPR) next week, added to the previously ratified 28 billion birr additional budget, a total of 76 billion birr is expected to be set aside to supplement the 387 billion birr formal budget allocated for the current fiscal year.

In an exclusive interview with The Reporter, Eyob Tekalign (PhD), State Minister of Finance, said that the request for supplementary budget was triggered due to unforeseen public expenditure requirements and declining revenues set for the current fiscal year.

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“Our expenditure requirements have been growing since the pandemic while our revenue shrank consistently,” the state minister said.  

The supplementary budget breakdown include a 15 billion birr financing to the Ministry of Health, accessible on a progressive manner, in addition to the growing need for emergency food assistance in support of those affected by the COVID-19 pandemic. According to Eyob, the emergency food assistance alone will require billions of birr to provide, in which the immediate purchase of 600,000 metric tons of wheat is one.

Last year, the Public Procurement and Property Disposal Service had awarded three companies to supply the stated amount of wheat at a cost of 4.1 billion birr (equivalent to USD 128 million).

By government’s latest the estimates, some 15 million more people are assumed to be in need of food assistance in recent CoVID-19 months. When more flood and locust victims are included, the number of people looking for food assistances will likely jump to more than 30 million, Eyob noted.

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Furthermore, Eyob argued, assistance to small scale industries, microfinance institutions and cooperatives is critical to avert massive job losses, which would ultimately require close to 4.5 billion birr in financing. Each of the above sectors will receive a disbursement of 1.5 billion birr via the Development Bank of Ethiopia (DBE), according to Eyob.

The government anticipates the worst of the COVID-19 pandemic is yet to be seen with the peak expected sometime in June or July, implying an equally expansionary fiscal policy for the upcoming fiscal year.

“We kept a tight lid on our fiscal policy, so far. But now, due to pandemic, we are adopting a new budgeting trend that entails at least 60 to 70 billion birr in addition to the previous year’s budget,” Eyob said.

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