House endorses 137.8 bln birr budget a week after schedule

The House of People’s Representatives gave the green light for the proposed budget of the 2012/13 Ethiopian budget year on Monday July 17, almost a week after its normal schedule. . The delay for ratifying the budget was related to Prime Minister Meles Zenawi’s poor health condition according to Capital sources in the house.
The PM usually shows up in the first week of July to defend his administration’s budget before the parliamentarians go for annual break to their respective constituency from July 8,  onwards. Following a widely held view that the PM will recover swiftly by ruling elites, the house extended its official recess by a week. However, he did not show up and defend his administration’s budget proposal. Sufian Ahmed, Minister of Finance and Economic Development, did the job in his place.
“The Prime Minister’s health condition is very good and stable. He is not going to take off his duties but took a leave of absence. We expect him to get back to his duties within days,” said Bereket Simon, Minister of Government Communication Affairs in a press briefing held on Thursday. 
The executive body of the government tabled before the legislator a historically high budget of 137.8 billion birr for this fiscal year, July 2012 to July 2013. . Seventy one percent of which will be consumed by development projects aimed at reducing poverty. 
The budget presumes single digit inflation and five percent depreciation of the birr against major foreign currencies.
It also carries a hole of 26.6 billion birr, up from the previous year’s 17 billion birr deficit. The government hopes to fill the gap both through external and internal loan financing mechanisms. The deficit represents 3.7 percent of the Gross National Product (GNP).
Seventy nine percent of the approved budget will be financed from domestic sources while the remaining 21 percent will come from external sources which include grants and loans.
The deficit financing scheme took into account sourcing a little over 13 billion birr from project and program loans that come from international financers. The other 13.6 billion is intended to be secured from domestic sources.
The approved budget for the Ethiopian fiscal year that started on July 8, 2012 and ends on July 7, 2013 surpasses last year’s budget by a whopping 20 billion birr. This represents 13.6 percent budget increase.
The endorsed budget allotted the majority of the budget, 54.4 billion birr, to capital expenditures like the previous year. Federal subsidy for regional governments will get the second highest share of the budget by receiving about 36.5 billion birr. The budget for recurrent expenditure also shows an upward movement. It stands at 26.8 billion birr while the budget classification allotted 20 billion birr for the execution of the Millennium Development Goals.
The government plans to collect more than 95 billion birr from domestic sources of which more than 87 billion birr will come from taxes. Value Added Tax will constitute more than 35.8 billon birr of the planned tax income. Tax revenue covers a little over 63 percent of the approved budget. 
Like the previous year, the government allotted the highest budget to road development. The road development enjoyed more than 21.9 billion birr. The second largest budget allotment went to education, securing a little over 18 billion birr. The third is agriculture. It is provided with 7.4 billion birr.
Like last year’s budget allocation, the budget for defense force remains 6.5 billion birr, consuming about 4.7 percent of the national budget.  
The house approved 117.8 billion birr budget which recorded 17 billion birr deficit for the concluded budget year plus four billion birr supplementary budget. The lion share of last year’s budget, 70 out of the 117.8 billion birr, was covered from taxation. Other related payments further push the finance secured from domestic sources covering close to 80 billion birr of the budget.

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