Welcome to Addis Fortune's weekly digest of major economic and business news. This week's headlines feature a tightrope walk in budget management, a heated parliamentary debate over a controversial wealth inquiry decree, the Education Authority's push for prioritising local talent over foreign expertise, taxpayers' outcry over an unclear tax code and alleged corruption, and a booming performance by Nile Insurance in asset growth.

The federal government's struggle to balance economic stability with growth aspirations is reflected in the proposed 971.6 billion birr budget for the upcoming fiscal year. Ethiopia's economic resilience will be tested in the coming year as the success of IMF negotiations, reform effectiveness, and debt management will be critical. Finance Minister Ahmed Shide stressed fiscal discipline, foreign currency management reforms, and building on past economic reforms while opposition MPs criticised the reforms' effectiveness and warned against devaluation. Negotiations with the IMF for a 3.5 billion dollar bailout, contingent on economic reforms, are ongoing. The government is struggling with a heavy debt burden, allocating 140 billion birr to debt servicing. Meanwhile, inflation remains high at 23 percent despite central bank measures. The budget projects a 21.1 percent economic expansion and allocates major funds for capital expenditures, relying heavily on domestic borrowing. Lawmakers expressed concerns about regional development and infrastructure rehabilitation.

International schools are required to exhaust all options for hiring qualified Ethiopian nationals before employing expatriates, according to the Federal Education & Training Authority. According to Shiferaw Shigute, head of the Authority, this will promote local hiring and integrate elements of the national curriculum into the schools. The new directives also cap annual registration fees and require international, community, and non-profit schools to establish student-teacher boards and incorporate national curriculum elements. They should also provide proof of property ownership or five-year lease agreements while capping classroom sizes at 30 students. Some school administrators expressed concern over the rapid implementation without a transition period while teachers, including expatriates, worry about job security and the impact on education quality. Experts argue that while promoting local hiring is essential, maintaining the quality and integrity of international curricula is equally important.

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A new bill granting the government extensive powers to trace, seize, and investigate assets acquired through "unexplained means" was presented to Parliament last week. The bill allows authorities to confiscate property based on civil proof standards, even without a criminal conviction. The draft proclamation, tabled by government whip Meseret Haile, consolidates existing laws on corruption and money laundering into a single framework. It shifts the burden of proof to individuals and institutions to demonstrate the legitimacy of their assets. Individuals with "unexplained assets" must present documentation within one month, with possible extensions of up to six months. While proponent MPs argue the bill is essential for financial stability and combating economic crimes, critics warn of potential abuses and the need for safeguards to protect citizens' rights. Globally, asset recovery laws are gaining traction, backed by the World Bank and the UN. However, legal experts emphasise the importance of fairness and transparency in implementing non-conviction-based asset recovery systems to prevent abuses and ensure public support.

Business owners expressed frustration over the tax policies while gathered at the Inter-Luxury Hotel, hosted by the Addis Abeba Chamber of Commerce & Sectorial Associations. Key issues included unclear regulations, bureaucratic hurdles, and alleged corruption. Ethiopia's tax system involves shared collection responsibilities between federal and regional authorities. A combination of 10 duties and levies currently contributes to the national tax revenues, which amounted to 612 billion birr last year. The government has plans to broaden the tax base in the coming year through new levies on property, the introduction of excise tax stamps, and the expansion of the Value Added Tax category. However, difficulties persist in efficiently collecting tax with business leaders questioning the government's approach to property tax. The tax dispute resolution process was also criticised for requiring large upfront payments, discouraging businesses from appealing.

Nile Insurance concluded its last financial year surpassing industry averages in premium collections and delivering robust returns to shareholders. The company's net profit surged by 51 percent to 298.3 million birr, placing it among the top performers in the industry alongside United and Nyala insurance companies. Earnings per share stood at 39.6 percent, above the industry average and close to the highest in the sector. Meanwhile, investment income rose by 52.2 percent, with substantial contributions from rent, dividends, and interest incomes. CEO Nigus Anteneh attributed this success to increased premium revenues, controlled claim expenses, and strong investment income. Despite facing inflation-driven costs and intense market competition, Nile Insurance maintained a commendable premium retention level and continued to invest strategically. The company's headquarters, asset investments, and increased capital reserves have bolstered its financial stability.

That’s all for today. We’ll be back with more updates next week. 
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