By Bruck Shewareged

Minister of Finance and Economic Development Sufian Ahmed assured parliament that next fiscal year's budget had been carefully prepared to neutralize the high running inflation.

In a budget speech he made to the House of Peoples' Representatives on Tuesday, Sufian disclosed the government's plan to allocate 54.3 billion birr budget for the 2008 - 2009 (2001 Ethiopia year) fiscal year, showing a marked rise from the current budget year.

The 2008 - 2009 fiscal year budget shows a ten billion birr increase over the current one.

The budget for the Ministry of National Defense increased by half a billion birr while that of the federal police showed an increase of 147 million birr.

The Minister made an optimistic projection regarding the performance of the economy. He predicted that agricultural output is expected to show a growth of 8.9 percent by the end of the current fiscal year while GDP will register an 11.3 percent growth.

The service industry performed better this year, showing an increase of 14 percent while the industrial sector will grow by 12 percent, according to economic indicators.

Sufian, however, mentioned that the rising cost of fuel that the country imports is putting big pressure on the trade balance.

He said that the amount of foreign currency that the country spends for fuel import exceeds the hard currency that Ethiopia earns from export trade by 73 percent.

He also pointed out that despite government effort, the revenue collection performance was not up to expectation.

The Minister added that government cannot cover all budgetary expenses by itself and had to resort to borrowing from internal financial institutions as well as donations and grants by international financial institutions and governments.

The budget proposal received some stern criticisms from opposition parties during the minister's budget speech.

A representative of the United Ethiopia Democratic Forces (UEDF) questioned why the defense budget showed a 500 million birr increase while the health sector benefited from a 5 million birr rise only.

He pointed out that the government should rely more on its own resources to cover its budget by increasing its revenue rather than depending on foreign borrowing and donations.

Former Ethiopia president Dr. Negasso Gidadea, who also shared the UEDF representatives view, said that relying on foreign donation will do the country no good.

He mentioned that the ratio of the defense budget compared to other sectors was very high and must be reduced.

Dr. Negasso also mentioned his reservation about the report for its failure to mention anything about the serious drought problem in the Wolaita Zone of the Southern Nations, Nationalities and Peoples Region.

Another MP, Temesgen Zewdie, said that government's appetite for more money must be restrained.

He argued that the government should not inject more money into the economy by allocating more budget while the economy was in an inflationary cycle.

Oromo Federalist Democratic Movement (OFDM) chairman Bulcha Demeksa doubted the veracity of the data in the minister's report because "it couldn't be verified by independent bodies."

"We can't even know how much Ethiopia's foreign debt is," Bulcha said. "Can we really trust the veracity of the report?"

The minister countered some of the criticisms from opposition MPs. Responding to Bulcha's comment, he said that anyone can get the information about the country's debt from the ministry's website, www.mofed.org.

He conceded, though, that foreign grant is not reliable. Currently, donations and grants cover about 20 - 25 percent of the country's budget.

He downplayed the comment about the defense budget being disproportional as the "4 billion birr allocated to it, when compared to the country's 260 billion birr GDP, is miniscule (1.54 percent)."

Regarding the criticism from Dr. Negasso and questions by other MPs as to why regional governments' budgets was reduced, Sufian said that since the past three years the responsibility to decide how much budget regions need has been taken up by the House of the Federation, not his ministry.

The budgetary draft bill accompanying the budget speech was referred to the Finance and Budget Standing Committee.

Parliament will deliberate on the final budget proposal for two successive days on July 1 and 2.