Ethiopia aims to curb inflation and strengthen fiscal discipline in 2025/26

Addis Ababa, July 17, 2025 (FMC) – Ethiopia’s 2025/26 fiscal plan prioritizes reducing inflation to single digits while modernizing tax administration and ensuring fiscal discipline, the Ministry of Planning and Development announced.

Minister Fitsum Assefa (PhD) said the government projects total revenue of 1.5 trillion birr, with 1.1 trillion expected from taxes and 129 billion from non-tax sources. Efforts will focus on strengthening tax audits, compliance, and property tax implementation, alongside expanding digital tax administration.

Significant reforms include the introduction of a minimum alternative income tax and a modern excise tax stamp system aimed at increasing revenue efficiency.

The budget for the fiscal year is set at 1.928 trillion birr, factoring in capital expenditures and the fiscal effects of foreign exchange reforms. The government successfully avoided borrowing from the National Bank in the previous fiscal year and will finance deficits through market borrowing in 2025/26 to avoid inflationary pressure.

Additional priorities include improving foreign exchange supply, implementing a market-based interest rate system, and encouraging regional and city administrations to manage budgets efficiently through digital procurement and targeted subsidies.