By Bruck Shewareged | The Reporter
Next fiscal year’s budget shows a deficit of 10 billion birr, Sufian Ahmed, the Minister of Finance and Economic Development, told parliament Thursday. The Government was asking parliament to approve a 64.5 billion birr budget for 2009-2010 fiscal year which starts in July.
Sufian said that the revenue that the government was able to collect stood at around 54.1 billion while its expenditure would be 64.5 billion birr, showing a deficit of 10.4 billion birr.
The Government expects to fill the gap in the budget from both local and foreign sources.
Sufian said that the government was hoping it would secure a loan of 3.9 billion birr from foreign financial sources while the rest, 6.9 billion birr, would come from local sources.
He added that the 10.4 billion birr that the government was going to borrow was 1.5 percent of the GDP and would not contribute to inflation or affect local borrowing.
Some MPs raised their concern whether it was possible to secure foreign loans at a time of global economic crisis.
Sufian argued that Ethiopia often borrowed from multi-national institutions such as the World Bank, and that these institutions were not that much affected by the global crisis.
“Moreover, the World Bank grants loans or direct assistance every three years, the current period extending from 2008-2011”, Sufian said.
Other institutions like the EU had a five-year grant programme, according to the minister.
Sufian said that donor countries like Britain would not reduce their assistance since PM Gordon Brown had pledged more assistance and even urged other big economies not only to maintain the amount of their assistance to poor countries but also to increase it significantly.
According to Sufian, the flow of foreign direct investment (FDI) would not show any significant variation in the coming budget year since, in the first place, it was low.
He said that the concern right now is that remittance money could significantly reduce it. Ethiopians living abroad are seriously affected by the economic crisis.
Of the total budget, nearly 14.5 billion birr is allocated for recurrent expenditure while the capital expenditure stood at 29.1 billion birr.
The rest, 20.9 billion birr, is allocated for subsidy appropriation to the various regional administrations.
The biggest subsidy goes to Oromia regional state and amounted to 6.8 billion birr while Amhara regional state came next with 4.9 billion birr.
The smallest subsidy goes to the Addis Ababa City Administration with nearly 114 million birr.