The government of Ethiopia plans to collect around Birr 1.5 trillion in tax revenue during the fiscal year beginning July 8, 2026, according to the federal government’s draft revenue budget document.
The draft document for the 2026/27 fiscal year, which is expected to be referred to the relevant standing committee today, shows that the government plans to collect more than Birr 2 trillion in total revenue, including foreign loans.
According to the document, the federal government’s total revenue, including foreign aid, is projected to reach Birr 1.8 trillion in the 2026/27 fiscal year. This represents a 17.4 percent increase compared to the total revenue expected to be collected during the 2025/26 fiscal year.
Of the total projected revenue, Birr 1.5 trillion, or 82 percent, is expected to come from tax revenue.
The draft budget document shows the following revenue projections:
Total revenue and aid is estimated at Birr 1,816,550,478,151.
Revenue from salaries is projected at Birr 97,346,528,758, while domestic direct taxes are expected to generate Birr 427,487,817,419.
Tax revenue from rental income is estimated at Birr 2,589,596,337, while business income tax from corporate organizations is projected to reach Birr 263,009,567,243.
Advance income tax from income items is expected to generate Birr 26,627,285,968.
Domestic indirect taxes are projected at Birr 277,988,904,983, while value-added tax on goods and services produced domestically is expected to reach Birr 225,535,497,927.
The government also plans to collect Birr 113,422,746,069 from value-added tax on domestically produced goods, Birr 3,639,722,663 from fuel and fuel products, and Birr 2,362,600,874 from sugar.
Meanwhile, the total federal government expenditure budget for the 2026/27 fiscal year is projected at Birr 2.3 trillion. This is an increase of Birr 411.5 billion, or 21.3 percent, compared to the approved expenditure budget for the 2025/26 fiscal year.
Of the total spending plan, Birr 1.2 trillion has been allocated for recurrent expenditure, while Birr 568 billion has been earmarked for capital expenditure.
The capital expenditure budget is less than half of the recurrent budget. The recurrent budget accounts for the largest share of total federal expenditure, representing 52.9 percent of the total budget. This shows a 16.5 percent increase compared to the recurrent budget allocation for the 2025/26 fiscal year.
The document indicates that, from the total recurrent expenditure, the largest share, Birr 542.1 billion, or 43.8 percent, is allocated for domestic and foreign debt repayment. In addition, Birr 236.4 billion, or 19.1 percent, is allocated for fertilizer and fuel subsidies, as well as for increasing the capital of the Ethiopian Petroleum Enterprise.
The draft budget also allocates Birr 520.6 billion for budget support to national and regional governments, while Birr 14 billion is allocated to regions to support the implementation of the Sustainable Development Goals.
The federal government’s net budget deficit for the 2026/27 fiscal year is projected at Birr 308.6 billion. Of this amount, Birr 5.7 billion is expected to be covered through external borrowing, while Birr 302.9 billion is planned to be covered from domestic sources.
The projected net budget deficit represents 1.4 percent of gross domestic product.
Source: Sheger FM102.1
