News: Lawmakers approve World Bank's $1.5B grant, concessional loan; Ministry to submit additional budget request
Addis Abeba – In its first emergency meeting of the third year, the House of Peoples Representatives (HoPR) approved the World Bank’s $1 billion grant and $500 million concessional credit from the International Development Association (IDA) extended to Ethiopia on Wednesday.
During the session, Minister of Finance Ahmed Shide announced that the ministry will soon submit a proposal to Parliament for an additional budget, which includes support and loans received by the Ethiopian government from international lending organizations. Ahmed stated that the additional budget will be allocated for salary increases for low-paid government employees and subsidies on fuel, oil, fertilizers, and medicines, among others.
On 04 July Ethiopia’s parliament unanimously approved a budget bill of 971.2 billion Br for the 2024/25 Fiscal Year, an increase of 20% from the last FY. Despite announcing the proposed additional budget request, Minister Ahmed did not mention the amount.
Members of Parliament questioned Minister Ahmed and his deputy Eyob Tolina on how the government plans to prevent illegal trade and smuggling to ensure the loan is used effectively. Concerns were also raised about addressing the rising cost of living for government employees with fixed incomes.
In particular, MP Abebaw Desalew of the National Movement of Amhara (NaMA) raised several concerns regarding the ongoing economic policy changes starting with questions on the executive branch’s dominance in enacting financial laws, despite the parliament’s legal procedure mandating Parliament to draft detailed legislation. “Is the role of the parliament to just raise hands? We never discuss detailed laws. We are also expected to consult with our constituencies. Article 89/6 of the constitution itself says the government must involve the public in matters of economic policies, but we are always enacting laws from the top down and repeatedly having the public accept them without consultation or the participation of the parliament. How is this viewed from a legal standpoint?” he asked.
On the issue of forex, MP Abebaw questioned the push for market-determined rates, citing the country’s poor peace and security situation and weak debt-servicing capacity. They argue that without stability and the rule of law, attracting foreign investment and balancing import-export trade—critical for economic stability—will be difficult.
Minister of Finance, Ahmed Shide, responded to the concerns, emphasizing that the loan will play a crucial role in maintaining a stable macroeconomic environment.
Upon providing the finance, Maryam Salim, World Bank Country Director for Eritrea, Ethiopia, South Sudan, and Sudan, cautioned that the “successful implementation of these reforms can help the country reach its full potential so more Ethiopians can thrive. Importantly, there is a strong emphasis on protecting poor and vulnerable people from the costs of economic adjustment and expanding opportunities for them to participate in the economy.” AS
