EMF – From 64.5 billion birr (7.3 billion in 2004) federal budget projected in the fiscal year 2009, 4 billion will be used for defense, finance and Economic Development Minister Sufian Ahmed announced on ETV last week.
The ambitious defense spending has been increased by 500 million from last year and it is twice the budget of health care, (2 Billion for health care).
This is not a surprising for a government which is at war with its neighbors, and killing and burning villages of the people at home. What surprises the political observers is that such huge defense budget is projected on the basis of foreign aid, loans and Diaspora remittance, which have been the major sources of the country’s foreign exchange.
Despite the financial and economic crisis in Europe and USA, Sufian Ahmed was very optimist of the foreign aid and loans to subsidize the budget.
“United Kingdom is the major donor to Ethiopia, from bilateral aid agreements. There is no reason for Mr. Gordon Brown not to offer us the budgetary support.” Sufian Ahmed responded to questions posed by MPs.
“The world bank and European bank will definitely release the money.” He added.
Sufian expressed his fear in the declaine of Diaspora remittance (about 10 billion birr) as the USA economy is dwindling. This is a risk of national budget that dependent on foreign sources.
The regime is targeting total tax revenue at 39.4 billion Br. which is hardly to realize given seemingly uncured country’s economic crisis and high inflation. And almost half of budget is anticipated to be covered from foreign loans and grants and remittance.