This quarterly macroeconomic update presents a detailed analysis of developments in Ethiopia’s federal government finance during the first quarter (Q1) of the 2024/25 fiscal year, covering the period from July 1 to September 30, 2024. It focuses on key fiscal components such as revenue and grants performance, government expenditure trends, the fiscal balance, and deficit financing mechanisms. This analysis is situated within the broader context of Ethiopia’s ongoing economic reforms and efforts to maintain fiscal discipline amid both external and internal challenges (IMF, 2024).
The report begins by assessing domestic revenue performance, including tax and non-tax revenues, alongside developments in external grants. It highlights progress in revenue mobilization, identifies shortfalls relative to annual targets, and discusses the role of grants in supplementing domestic revenues. The structure of government revenue is also examined to understand its resilience and responsiveness to policy measures.
Government expenditure trends are analyzed next, focusing on execution rates across different spending categories. The update evaluates whether planned budgets were effectively implemented and explores shifts in spending patterns that may reflect evolving policy priorities or fiscal constraints.
Subsequently, the update examines Ethiopia’s fiscal balance, both including and excluding external grants, to provide a clearer picture of the underlying fiscal stance. It then analyzes deficit financing, focusing on the composition and trends of financing sources, including domestic and external borrowing. Financing performance against budgeted targets is also discussed, with attention to the implications of borrowing patterns for fiscal sustainability and debt management, emphasizing the importance of balancing short-term financing needs with long-term economic stability. In summary, these analyses provide a comprehensive picture of Ethiopia’s fiscal position as the country navigates its economic adjustment and reform agenda.
