By Benadeta Mwaura - Reporter
Ethiopia, June 12, 2026 - Ethiopia's Somali Regional State has secured the third-largest allocation among the country's regional administrations under a record 2.34 trillion birr ($14.5 billion) federal budget, highlighting the region's growing economic, strategic and geopolitical significance within the Horn of Africa.
The spending plan, approved by the Council of Ministers and submitted to the House of People's Representatives for final approval, is the largest budget in Ethiopia's history and comes as the government accelerates economic reforms aimed at sustaining growth, attracting investment and strengthening public finances.
Under the proposed framework, 520.5 billion birr (approximately $3.23 billion) has been allocated to Ethiopia's 12 regional states and two city administrations.
Of this amount, the Somali Regional State will receive 51.9 billion birr (about $322 million), making it the third-largest recipient of federal transfers after Oromia and Amhara.
Oromia Region received the largest allocation at 179.3 billion birr (approximately $1.11 billion), followed by Amhara Region with 112.4 billion birr (about $697 million).
The Somali Region's allocation places it ahead of several other major regional administrations, including:
- South Ethiopia Region which secured 36.5 billion birr ($226 million)
- Tigray Region with 31.3 billion birr ($194 million)
- Central Ethiopia Region earning 30.9 billion birr ($192 million)
The ranking underscores the federal government's recognition of the Somali Region's strategic importance as one of Ethiopia's largest territorial states and a key economic corridor connecting the country to neighboring Somalia, Kenya and Djibouti.
The region remains central to Ethiopia's livestock economy, which is among the country's leading foreign exchange earners. It also serves as a major gateway for cross-border trade and regional integration efforts being pursued by the federal government.
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The allocation comes against the backdrop of ambitious economic reforms spearheaded by Prime Minister Abiy Ahmed, including exchange rate liberalization, monetary reforms and measures backed by the International Monetary Fund and the World Bank aimed at stabilizing the economy and attracting private investment.
However, budget documents show that debt servicing will remain the single largest expenditure item in the upcoming fiscal year.
The federal government has earmarked 542.1 billion birr (approximately $3.36 billion) for domestic and external debt repayments, accounting for more than 43% of recurrent expenditure.
Of this amount, 293.3 billion birr ($1.82 billion) will be used to service external debt obligations, while 248.7 billion birr ($1.54 billion) will go toward domestic debt repayments.
The figures highlight the significant fiscal burden Ethiopia continues to face despite recent debt restructuring efforts and ongoing negotiations with international creditors.
Nevertheless, authorities remain optimistic about the country's economic prospects.
The International Monetary Fund projects Ethiopia's economy will grow by approximately 9.3% during the current fiscal year, while government estimates place growth above 10%, potentially making Ethiopia one of the fastest-growing economies globally.
Officials believe continued reforms, infrastructure investment and increased private sector participation will help sustain that momentum, with regions such as Somali expected to play an increasingly important role in Ethiopia's long-term development strategy.
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