Ethiopia's president projects 10.1% growth for 2026/27; The Reporter says tax-to-GDP target is 9.62%

Ethiopia's President Taye Atske Selassie said on Tuesday 6 October that the economy is projected to grow by 10.1 per cent in the current 2026/27 fiscal year, Xinhua reported on 6 October. The Reporter Ethiopia reported on 6 October that he also announced a target of raising the tax-to-GDP ratio to 9.62 per cent in the same year.

Taye spoke at the joint opening session of the House of Peoples' Representatives and the House of Federation in Addis Ababa. The fiscal year started on 8 July.

The new federal government was formally established on Monday, when the ruling Prosperity Party appointed incumbent Prime Minister Abiy Ahmed for another five-year term. The president named five priorities for the budget year: sustaining broad-based economic development, delivering quality public services, ensuring peace and security, improving institutional coordination and strengthening foreign relations.

The economy grew 10.2 per cent in the last fiscal year. The president said comprehensive efforts were under way to sustain the positive momentum and reach 10.1 per cent growth this year. He said strategic fiscal measures are being implemented to support a thriving and diversified economic base, and that they are meant, among other things, to improve domestic revenue collection.

In a Xinhua report that Kenya's Capital FM carried on 12 June, Finance Minister Ahmed Shide presented the same 10.1 per cent forecast to the lower chamber of parliament. He forecast growth of 12.6 per cent in industry, 9.9 per cent in services and 7.6 per cent in agriculture.

Taye said annual export trade revenue reached a record US$11.2 billion and foreign direct investment inflows rose to US$4.5 billion in the 2025/26 fiscal year, which ended on 7 July.

On revenue, The Reporter said the Ministry of Revenue collected a record ETB 1.518 trillion in 2025/26. The estimated tax-to-GDP ratio recovered from a historic low of 6.2 per cent in 2023/24 and 7.8 per cent in 2024/25, after peaking at 12.7 per cent in 2014/15.

To reverse the decline, the government has introduced aggressive enforcement measures, expanded excise taxes, tighter value-added tax tracking and digital transaction monitoring. Ethiopia's longer-term goal is a ratio of 15 per cent to 17 per cent, to be reached mainly by broadening the tax base rather than raising rates on existing taxpayers. The paper put the ratio in peers such as Kenya and Rwanda at about 14 per cent to 16 per cent.

Agriculture and a large urban informal sector remain largely outside the formal tax framework.