The deficit of the tabled upcoming year’s budget is widened from the universally recommended three percent of the GDP. The tax collection for the current budget year is expected to stand at 294 billion birr which is about 12 percent lower than the projection set about a year ago.
During his Budget Speech, Ahmed Shide, Minister of Finance (MoF), told parliament on Tuesday June 7 that from the proposed 786.6 billion birr budget for the 2022/23 budget year, the gap is 231.4 or over 29 percent of the proposed budget which will be covered by domestic and external sources.
He said that the budget deficit was 3.4 percent of the GDP, “the budget deficit has shown some increment in comparison to the preceding periods. The gap is widened due to the need for coverage in crucial areas in the upcoming budget year.”
According to Ahmed the major portion, 224.5 billion birr of the budget deficit will be covered by local sources whereas the remaining 6.9 billion birr will be sourced from foreign creditors.
Based on the deficit that will be covered from domestic source, it is stated to be 3.3 percent of the GDP.
The country has been strongly pursuant in controlling the budget deficit up to three percent of the GDP, which is of high recommendation even by international standards and partners.
However, the latest pressures bagged by COVID 19, internal distraction and international partners, some of whom paused their pledges because of the northern conflict, the government is forced to look for additional resources from local financers like taking direct advance from the central bank, which experts recommended that taking huge amounts of money from the central bank would have a ripple effect on the economy including galloping the inflation.
However, the central government has been strongly controlling itself from taking finance from the central bank and has shifted to the finance amassed from alternative instruments like treasury bills. While the conflict which occurred in the northern part of the country followed by massive distraction mainly carried out by the outlawed former ruling party TPLF forced the central government to access finance from direct advance from the central bank particularly in this budget year.
For the coming budget year, the central government has also disclosed that it has allocated huge amount of budget for construction projects which were damaged by the conflict.
From the total proposed budget, 400 billion birr or 84 percent is expected to be secured from tax revenue. The estimated tax collection has an increment of 19.8 percent compared with the projected tax collection for the 2021/22 budget year that will come to an end on July 7.
However, MoF disclosed that the actual attainable tax collection on the current budget year will be 294 billion birr that has a reduction of about 12 percent from the projection.
The 2022/23 budget year tax collection projection will have an increment of 36.1 percent compared with the estimated actual collection of this year.
In the coming budget year, the government has set to implement tax reforms to attain the targeted revenue.
Ahmed said that the reform on VAT, excise tax, and introduce property tax are some of the new reforms that will be seen in the coming budget year.
In the 2022/23 budget year, the economy is expected to change its due course tracking to its projection stated under the ten years economic strategy; to grow by 9.2 percent.
MoF has also disclosed that the inflation rate that reached 36.6 percent as per April’s monthly inflation figure is estimated to reduce to 11.9 percent in the coming budget year.
MoF proposes 17% increase in upcoming budget year
Addis chamber’s new solution based approach
The Addis Ababa Chamber of Commerce and Sectoral Associations (Addis Chamber) disclosed that it will take new approaches to work with the government for the benefit of the private sector.
The city chamber, the first private association in the country, has also disclosed that it will celebrate its 75th anniversary in different events with primary focus on panel discussions in different economic topics.
The association officials, who met media on Tuesday June, 7 said that taking different approaches to ease challenges on the private sector will be their strategy unlike the past experience.
“Confrontation would not be our strategy,” Shibeshi Bettemariam, Secretary General of Addis Chamber, said, adding, “As a responsible organ we will solve the private sector problems by negotiation and discussion.”
“Service and knowledge leadership will be the strategy of the city chamber to tackle challenges rather than engage on controversy like the past with public offices or representatives,” he added.
Mesenbet Senkute, President of Addis Chamber, said that in related with the anniversary those who worked for the city chamber will be recognized.
Plugging British investors to Ethiopian businesses
British embassy in collaboration with Grant Thornton organizes an event called private equity. The event aimed to provide an online deal matching services that bridges the gap between UK funders and investment opportunities in Ethiopia.
The event which was held on June 7, 2022 at Hyatt regency hotel in Addis Ababa saw experts and panelists discussing on the challenges and opportunities of Private Equity investments in Ethiopia as well as key insights into securing and capitalizing on investment opportunities from the perspective of both the investor and investee.
HOW COULD A CEMETARY BE DEVELOPED?
At the outset, we would like to acknowledge the usual complaint that goes more or less like this; after all, Africa is an amalgam of 55 nation states, hence it is erroneous to lump all these countries together and prescribe similar policies, just because they happen to be on the same continent. At the same time one can also retort; aren’t many of the chronic problems that ail the continent similar? Won’t we benefit if we just concentrate on those critical challenges that affect us all? In other words, aren’t the generic problems of the African nation states more pressing than their exaggerated claim of peculiarities?
We pose what we think is the paramount question that must be addressed by all Africans. Why do we Africans refuse to think about our own future realistically and honestly, on our own terms? We tend to endorse only the finished products or what are called ‘successes’ from abroad, while neglecting the plenty of failures that went into the making of these ‘successes’. We believe these experiences should inform our efforts to define and implement an urgently needed African civilization in its totality! The civilization we currently subscribe to and we might add blindly, (i.e., the modern world system) is ending, whether it will end in a bang or a whimper is besides the point. There are plenty of reasons why collapse is inevitable. For a start, humanity, or dominant interests to be more precise; are refusing to harmonize existing human civilization with the ways of Mother Nature.
In fact, no society remains static. For better or worse, all societies change, they evolve and ultimately decay. Unfortunately, the fixation of the top leadership of the world system doesn’t allow the consideration of concrete reality in their calculus. Talk about leadership! The consequences of such attitudes will become obvious as we enter the final phase of this self-inflicted mayhem, which is bound to upend many societies across the planet!
Concerned Africans must start asking the substantive, yet difficult questions. Given our continuous marginalization, how are we going to set up social organizations that might have a realistic chance of survival? The consumption model of society, as we currently observe it in the North, is neither fulfilling nor is it resilient, let alone sustainable. Blindly adhering to this model can only bring instability and ultimate disintegration. Signs are everywhere in today’s Africa, if one is honestly inclined to examine our concrete socio-economic reality without the bias of hyphenated learning! Why do we have an increasing number of African states failing? What are the root causes for such failures? Again, establishment wisdom doesn’t throw light on the fundamental problems we are stuck with, as doing so will reveal the hidden secrets that underlie our continuous disfranchisement. So long as Africa’s lopsided economic relation with the outside world is grounded on ‘unequal exchanges’, all efforts towards economic development (as we know it) will only come to a naught! The challenges going forward are numerous and quite formidable. They constitute, amongst other things, the need to revitalize our ecosystem. We need to move away from the merciless exploitation of nature. We need to reaffirm our traditional values that revere creation in all its diverse manifestations. We have to honestly acknowledge, based on facts on the ground, that the prevailing economic model that is in currency is untenable and very misleading. Failing to interrogate the shortcomings of the existing global order will only result in our speedy progress towards the precipice!
The ‘Africa Rising’ meme is a figment of the imagination of those who have no clue as to what is going on in the real world. Certainly, this group includes, besides the malicious ones, our own learned elites. Our elites are, at best, imitators and not creators. Regurgitating what has been inculcated in their minds by the global establishment is one of the main reasons why we cannot imagine our future without relying on the counsel of the institutions of the polarizing system. In a world where resources are diminishing, the biosphere is in trouble, etc., etc., our elites still want to adhere to the dominant economic narrative that preaches non-stop growth on a finite planet. This is suicidal! Expectedly, our elites do not have much to offer, except to keep on proposing what has been failing us for decades. Commodity production, mineral extraction, overpopulation, fragmentation, hyphenated/inorganic leadership, mismanaged urbanization, environmental degradation, etc., are all generic problems of the African continent. Unless we come up with something that is equitable and resilient, the existing model, which we are hooked on, will only deliver chaos and fragmentation; in other words, the proliferation of ‘failed and failing states’!
On top of these deep problems, Africa is saddled with corrupt and incompetent political leadership. It is almost always the criminal thugs that are systemically encouraged, by the global dominant interests, to take the reins of power. After all, it is these gullible crooks, who are more than willing to sell their countries for crumbs, while hiding their loot in the metropolis.
