Federal Budget Aims at “Economic Stability” , Yet Urban Residents Struggle with Soaring Living Costs

By Getahun Tsegaye
Staff Reporter 

Addis Ababa, Ethiopia – The Federal Government of Ethiopia has tabled a draft budget of 1.93 trillion Birr for the upcoming 2018 fiscal year (Ethiopian calendar). This significant proposal is expected to play a crucial role in curbing inflation and fostering a stable economy, according to Dr. Eyob Tekalign, State Minister of Finance.

In an interview with ETV, Dr. Tekalign emphasized that the proposed budget‘s size is designed to prevent an escalation of inflation and contribute to overall economic stability. He highlighted the nation’s consistent progress in budget utilization and revenue collection, noting that “in recent years, our overall budget utilization and revenue collection capacity have significantly increased.” The State Minister also pointed out that the country’s economy has grown threefold to fourfold over the past seven years.

Dr. Tekalign stated that the 1.93 trillion Birr draft budget for the 2018 fiscal year takes into account the entirety of Ethiopia’s economic landscape. He further elaborated that the budget preparation process carefully considered both revenue and expenditure. Approximately 1.5 trillion Birr of this year’s budget is expected to come from domestic revenue and foreign aid.

The State Minister also underscored that the proposed federal budget for the 2018 fiscal year is designed to support low-income residents. He indicated that the funds will be allocated to critical sectors such as infrastructure, education, agriculture, and health. Additionally, there will be investments in regional states, emphasizing that the overall budget focus is pro-poor and development-oriented.

Dr. Tekalign also highlighted several national achievements, proudly stating, “For the first time, we are about to conclude the fiscal year without borrowing any money from the National Bank.” He added that inflation has been decreasing and stressed the government’s efforts to mitigate its impact on citizens.

The draft budget has been discussed in the House of Peoples’ Representatives and has been referred to a standing committee for detailed review.

According to recent data from the Ethiopian Statistical Service (ESS), Ethiopia’s inflation rate has shown a declining trend in 2024, offering cautious optimism amid ongoing economic reforms. As of May 2024, headline inflation dropped to 23.3%, down from over 30% in early 2023, driven primarily by slowing food inflation, which remains a key concern for the population.

Despite such figures dropping and the government’s claim of economic improvement, residents in Addis Ababa who spoke to Borkena offered varying accounts that highlight a more troubling reality.

Selamawit, a mid-level civil servant working in Yeka Sub-City, expressed her frustration: “My salary hasn’t changed in years, but the price of everything—from onions to transportation—has doubled. I now sometimes skip lunch just to stretch to the month.”

Abebe, a taxi driver in the Piassa area, said life has become unbearable. “Fuel prices are up, spare parts are expensive, and still, passengers complain if I slightly raise the fare. But I have to choose between feeding my children or repairing my taxi.”

Mulu, a single mother who works at a private printing shop, mentioned how rent is consuming most of her income. “I used to pay 3,500 birr, now it’s 7,000. I’ve moved three times in two years just to find something cheaper. It’s humiliating.”

Other residents who preferred to remain anonymous spoke about cutting down on basic needs like meat, dairy, and even school materials for their children. One young graduate who recently started work at a small NGO remarked, “Transportation costs alone eat up nearly a quarter of my income. I can’t afford to live close to work, so I commute for at least three hours daily in overcrowded public buses.”

Independent economist , speaking on the condition of anonymity, offered a broader perspective. “The government may report slowing inflation, but core inflation remains high—especially in essentials like food, transport, and housing. The purchasing power of urban dwellers, particularly those on fixed incomes, is eroding significantly. The official numbers don’t always reflect the lived experience of the average citizen.”

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