In his budget speech, Ethiopia’s Minister of Finance, Ahmed Shide, outlined the government’s plans for the 2025/26 fiscal year, emphasizing a strong commitment to avoiding high-powered money as a means to cover the budget deficit. The proposed budget totals 1.93 trillion birr, with a deficit of 22%, amounting to 417 billion birr.

Ahmed told Capital that the government plans to finance the deficit exclusively through domestic sources, stating, “Tax revenue and treasury bills will be the only means to cover the budget gap.”

He highlighted a significant change from previous years, noting that the government has not sought direct advances from the National Bank of Ethiopia (NBE)—a major contributor to inflation—in the current fiscal year.

Of the total deficit, 67% (277.5 billion birr) will be financed through domestic sources, while the remaining 33% will come from direct budget support from international partners.

“We have no alternative but to rely on tax revenues and the money market, specifically treasury bills,” Ahmed stressed, clarifying that the government would only consider using an overdraft facility as a last resort.

However, borrowing costs from domestic sources have increased as part of ongoing reforms. International partners have encouraged the government to pursue market-based financing instead of direct advances from the central bank.

To attract more investors, the government has adjusted treasury bill yields to provide positive real returns in relation to inflation.

Since February, T-bill rates have surpassed the central bank’s 15% policy rate, reaching 17% in the most recent auction.

Ahmed noted that avoiding direct advances has helped to limit base money growth this fiscal year.

The NBE’s tight monetary policy has reduced reserve money growth from 24.8% in July 2024 to 17.3% in November, while broad money growth decreased from 24.8% to 19% during the same period.

He attributed this stability to measures such as open market operations and credit ceiling caps.

The International Monetary Fund (IMF) has commended Ethiopia’s commitment to a tight monetary policy and has urged its continuation.

For the upcoming fiscal year, the government aims to raise 1.5 trillion birr from domestic revenue and international grants, with 1.2 trillion birr (81%) expected from local sources and 235 billion birr from grants. Tax revenue is projected to increase by over one-third, reaching 1.1 trillion birr.

Debt servicing remains a significant expenditure, with 463 billion birr (29% of the budget) allocated for repayments, including funds owed to the Commercial Bank of Ethiopia for past public enterprise bailouts.

The budget allocates 1.2 trillion birr (61%) for recurrent expenditures, 412 billion birr (21.6%) for capital projects, and 315 billion birr for regional budget support.

Ahmed’s speech underscores Ethiopia’s shift toward fiscal discipline and market-driven financing, with the aim of curbing inflation and stabilizing the economy.

Changsha, China

The 4th China-Africa Economic and Trade Expo opened on June 12, 2025, in Changsha, Hunan Province, marking a significant step in strengthening economic cooperation between China and African countries amid shifting global trade dynamics. The four-day event, themed “China and Africa: Together Toward Modernization,” is the largest in the expo’s history and reflects China’s ongoing commitment to deepening ties with the African continent.

Since its debut in 2019, the Expo has grown steadily, with Chinese President Xi Jinping reaffirming its role in advancing China-Africa economic cooperation and fulfilling previous commitments. This year’s event brought together participants from 53 African nations, 11 international organizations, 27 Chinese provinces and municipalities, and over 4,700 enterprises, trade associations, and financial institutions from both continents.

The expansive exhibition covers 100,000 square meters and features pavilions from 26 African countries alongside promotional spaces from 23 Chinese provinces and cities. Businesses from sectors including agriculture, industry, and medical supplies showcased their products, with special highlights such as “African Quality Products” and the China-Africa Fashion Industry segment. These exhibits featured African agricultural and food products, handicrafts, and Chinese electromechanical equipment, underscoring the diversity and depth of bilateral trade.

Simultaneously, 30 economic and trade events are taking place to implement the China-Africa “10 Cooperation Action Plans,” facilitating dialogue and partnerships across infrastructure, innovation, logistics, and new energy sectors.

Ethiopian participants at the Expo expressed optimism about expanding trade with China. Coffee exporters highlighted the growing demand for Ethiopian coffee in the Chinese market, emphasizing the opportunity to introduce the unique quality and flavor of their products to new consumers. “The relationships we are building here will help us reach more customers in China and across Africa,” they said.

Similarly, Ethiopian leather producers showcased their craftsmanship in the African Quality Products segment. “China’s interest in high-quality leather is strong. This is a great chance to collaborate with China’s fashion industry and open new markets,” said Fatuma Abdullahi, an exhibitor.

The Expo also hosted China Broadcasting International Economic and Technological Cooperation Co., Ltd. (CBIC), which invited over 30 African media professionals to China for training, further strengthening media and cultural ties.

The event has already yielded tangible results, with 10 collaborative projects signed, aligned with 175 cooperative action plans. The total value of agreements reached exceeds $11.39 billion, highlighting the substantial economic impact of China-Africa cooperation.

Chinese Foreign Minister Wang Yi, who attended the opening ceremony, reaffirmed China’s steadfast support for Africa’s modernization and development. “No matter how the international landscape may change, China will always stand firmly with Africa, offering strong support and serving as a true friend and sincere brother in Africa’s journey toward development,” Wang said.

The 4th China-Africa Economic and Trade Expo continues through June 15, serving as a vital platform for fostering high-quality development and deepening the China-Africa partnership in an evolving global economic environment.