Ethiopia's Tax Take Nearly Tripled in Two Years to 1.518 Trillion Birr

Ethiopia's tax collections reached 1.518 trillion Birr in 2025/26, close to three times the level of two years earlier, according to Shega's analysis. The headline is a reform success story. The arithmetic underneath it is more complicated.

How much is growth and how much is the exchange rate

A large share of Ethiopian tax revenue is collected at the border — customs duty, excise and VAT on imports — and assessed on values converted at the prevailing exchange rate. When the Birr was floated, the Birr value of an unchanged dollar of imports rose sharply. Collections rise with it, in nominal terms, without a single additional transaction being taxed.

That makes the tripling a weaker measure of administrative progress than it first looks, and it is the reason revenue-to-GDP is the number worth watching rather than the Birr total. Shega's point is not that the gain is illusory — new taxpayers have been registered and compliance has tightened — but that the devaluation is doing work the headline does not show.

The second-round effect

The reform has not stopped at collecting existing taxes better. New levies have been introduced, and they are arriving on households that have already absorbed a currency devaluation, fuel price adjustments and food inflation. For businesses, that reads two ways: a narrower consumer wallet on the demand side, and a higher effective cost of compliance on the supply side.

It also changes the character of the fiscal story the government is telling its creditors. Revenue mobilisation is a core commitment under the IMF arrangement, and a revenue line flattered by the exchange rate is harder to sustain once the currency stabilises — precisely when reconstruction spending is being discussed.

Open

Neither the Ministry of Revenue nor the Ministry of Finance has published a decomposition separating exchange-rate effects from real base growth in the 1.518 trillion Birr figure. Nor is there a public estimate of what share of the increase came from newly registered taxpayers versus higher assessments on existing ones. Without that split, the sustainability of the revenue path cannot be judged from the outside.

Sources: Shega, 20 October 2026