Ethiopia Budget Set to Reach Record $14.7 Billion Amid Iran War-Linked Costs

Ethiopia’s government says spending will rise in the next fiscal year to about $14.69 billion, mainly due to costs linked to the Iran war and wider Middle East tensions, including increased fuel subsidies. Finance Minister Ahmed Shide said the higher spending will still be accompanied by a slightly lower budget deficit of 1.4% of GDP and projected economic growth of 10.1%. The country also expects $10.5 billion in export earnings this year as it continues debt restructuring talks over its $1 billion international bond, which have faced setbacks after some bondholders rejected the latest offer.

Ethiopia’s government says it expects a significant rise in public spending in the next fiscal year, mainly driven by costs linked to the Iran war and broader Middle East tensions, according to Finance Minister Ahmed Shide. He said total expenditure is projected to increase to about 2.34 trillion birr ($14.69 billion) in the 2026/27 fiscal year, up from 1.92 trillion birr in the current year.
Shide told lawmakers that the spending increase largely reflects additional expenses tied to the regional crisis, including higher fuel subsidy costs since the conflict began, though he did not provide detailed breakdowns of the war-related expenditures.
Despite the higher spending, the government expects the fiscal deficit to improve slightly, projecting it at 1.4% of gross domestic product next year, compared with 2.2% previously forecast for the current year. Officials also maintained a strong economic growth outlook, forecasting expansion of 10.1% next year, roughly in line with current-year performance.
On the revenue side, Ethiopia reported $8.7 billion in export earnings over the first 10 months of the fiscal year and expects total exports to reach about $10.5 billion by year-end. These figures remain closely monitored amid ongoing disputes between the government and international bondholders over Ethiopia’s debt position.
Debt restructuring talks over the country’s $1 billion international bond continue, with negotiations facing setbacks after bondholders rejected the government’s latest proposal. Some creditors are reportedly considering legal action, although the finance minister said discussions are ongoing and that the government is close to agreements with certain groups of bondholders.