Key Takeaways:
• Birr 1.5tn — Ethiopia plans to collect tax revenue in the 2026/27 fiscal year.
• Birr 1.816tn — total federal revenue and aid is projected for 2026/27.
• 82% — tax revenue will account for the largest share of projected revenue.
• Birr 2.3tn — federal expenditure budget is projected for the 2026/27 fiscal year.
• Birr 1.2tn — recurrent expenditure takes 52.9% of the federal spending plan.
• Birr 568bn — capital expenditure is less than half of recurrent spending.
• Birr 308.6bn — net budget deficit is projected at 1.4% of GDP.
Market Impact:
Ethiopia’s draft revenue budget places tax collection at the centre of fiscal financing for the 2026/27 year beginning July 8, 2026. The government expects tax revenue to provide 82% of projected revenue, while total revenue and aid are forecast to rise 17.4% from 2025/26.
The spending structure shows continued pressure from recurrent costs, debt service and subsidies. Domestic and foreign debt repayment receives Birr 542.1 billion, while Birr 236.4 billion is allocated for fertilizer and fuel subsidies and capital support to the Ethiopian Petroleum Enterprise.
The deficit plan relies overwhelmingly on domestic financing. Of the projected Birr 308.6 billion net deficit, Birr 302.9 billion is expected from domestic sources, leaving businesses and banks exposed to the government’s local borrowing needs.
Key Numbers:
Birr 1.5tn — Tax revenue target — main fiscal financing source
82% — Tax share of projected revenue — revenue-concentration signal
Birr 1,816,550,478,151 — Total revenue and aid — federal revenue envelope
17.4% — Revenue increase from 2025/26 — fiscal growth target
Birr 2.3tn — Federal expenditure budget — total spending plan
Birr 411.5bn — Expenditure increase — 21.3% rise from 2025/26
21.3% — Expenditure growth — spending expansion rate
Birr 1.2tn — Recurrent expenditure — largest spending category
52.9% — Recurrent share of budget — operating-cost burden
16.5% — Recurrent budget increase — year-on-year rise
Birr 568bn — Capital expenditure — public investment allocation
Birr 542.1bn — Domestic and foreign debt repayment — largest recurrent item
43.8% — Debt repayment share of recurrent spending — fiscal pressure marker
Birr 236.4bn — Fertilizer, fuel subsidies and EPE capital increase — support allocation
19.1% — Subsidy and EPE capital share of recurrent spending — policy cost marker
Birr 520.6bn — Budget support to national and regional governments — intergovernmental transfer
Birr 14bn — Regional SDG implementation support — targeted transfer
Birr 308.6bn — Net budget deficit — financing gap
Birr 5.7bn — External borrowing deficit financing — smaller financing source
Birr 302.9bn — Domestic deficit financing — main borrowing source
1.4% — Deficit-to-GDP ratio — fiscal-balance indicator
Birr 427.5bn — Domestic direct taxes — major tax source
Birr 277.99bn — Domestic indirect taxes — consumption-linked revenue
Birr 263.0bn — Corporate business income tax — company tax contribution
Birr 225.5bn — Domestic VAT on goods and services — VAT revenue base
Birr 97.3bn — Salary income revenue — payroll-related collection
Birr 26.6bn — Advance income tax — income-item collection
Birr 3.64bn — Fuel and fuel-products VAT — energy-linked tax revenue
Birr 2.59bn — Rental income tax — property-linked revenue
Birr 2.36bn — Sugar VAT — product-specific collection
July 8, 2026 — Fiscal year start — budget implementation date
11 June 2026 — Article update date — reporting timeline
Business Signal:
Ethiopia’s 2026/27 fiscal plan signals heavier reliance on tax collection and domestic borrowing while recurrent costs, debt service and subsidies dominate public spending.