ADDIS ABABA – Ethiopia expects its economy to accelerate in the upcoming fiscal year, projecting real GDP growth of 8.9%, up from the current estimate of 8.4%, according to Finance Minister Ahmed Shide. The forecast was presented during a parliamentary session reviewing the federal government’s budget proposal for the 2025/26 fiscal year, which starts on July 8.
The minister attributed the upbeat outlook to ongoing macroeconomic reforms and the positive impact of government-led investment across key sectors. Ethiopia, one of Africa’s largest economies, has been pushing forward with an ambitious reform program, backed by the International Monetary Fund (IMF), aimed at stabilizing inflation, restructuring debt, and liberalizing sectors such as telecoms and finance.
Despite ongoing challenges, including inflation and foreign exchange shortages, the government remains confident in its growth momentum. The total proposed government spending for the fiscal year stands at 1.9 trillion birr (approximately $33.8 billion), with a slight increase in the budget deficit projected at 2.2% of GDP, compared to 2.1% this year.
Ethiopia defaulted on a portion of its external debt in late 2023 but has since reached a preliminary agreement with its official creditors. This agreement, combined with progress on economic reforms, is expected to unlock further support from the IMF and other partners, helping the country regain financial stability.
The government’s fiscal plan emphasizes investments in agriculture, infrastructure, education, and health, while continuing efforts to modernize tax collection and broaden the revenue base.
The growth forecast comes amid cautious optimism that Ethiopia can sustain recovery after years of conflict, economic shocks, and pandemic-related disruptions. While risks remain, the latest projections signal hope that the country is on a more stable and reform-oriented path.