As an AI language model, I don't have current information on the subject, but in general, some of the

problems Ethiopia might face with fiscal policy include:

1. Weak revenue collection: Ethiopia's revenue collection system remains weak, with a low tax base and
limited capacity to collect taxes and other revenues.

2. High government spending: The Ethiopian government has been spending a significant portion of its
budget on public infrastructure projects, such as roads, railways, and airports. However, this has
resulted in a large budget deficit and unsustainable debt levels.

3. Inefficient public spending: Even with high government spending, there are concerns about the
efficiency of public spending. Corruption and mismanagement of funds have been reported, leading to
wasted public resources.

4. Limited private sector growth: There have also been concerns that the government's focus on public
infrastructure projects may be crowding out private sector investment, which is necessary for
sustainable economic growth.

5. External economic shocks: Ethiopia is vulnerable to external economic shocks, such as lower global
commodity prices or a slowdown in major trading partners' economies, which can affect its fiscal
stability.

As an AI language model, I do not have access to current events or recent data, but the following issues
are likely to be the problems of fiscal policy in Ethiopia:

1. Limited Revenue Sources: Ethiopia's economy is heavily reliant on a few sectors, including agriculture,
which contributes over 40% to the country's GDP. Limited revenue sources restrict Ethiopia's ability to
fund public investments and implement social programs.

2. High Public Debt: Ethiopia's public debt has risen significantly in recent years due to financing
projects, and it is expected to increase further. High public debt limits Ethiopia's ability to borrow and
could result in higher interest rates, affecting the economy's overall growth.
3. Inefficient Allocation of Resources: Despite Ethiopia's impressive economic growth, there is still
inefficient allocation of resources, leading to decreased returns in investment projects. This could be due
to poor governance and corruption, which reduces Ethiopia's potential for sustainable growth.

4. High Poverty Rate: Ethiopia has one of the highest poverty rates globally, with over 20 million people
living below the poverty line. This affects the government's ability to increase revenue sources, which
could limit its fiscal policies' effectiveness.

5. Limited Fiscal Space: The Ethiopian government has limited fiscal space to conduct expansionary fiscal
policies, such as increasing public expenditure and tax cuts, due to a narrow revenue base, high public
debt, and low foreign reserves.

Suggestion
As an AI language model, I do not have personal opinions or
beliefs, but I can provide general information about fiscal
policy reform.

Fiscal policy refers to the government's use of taxation and

spending to influence the economy. The main goal of fiscal
policy is to stabilize the economy by promoting economic
growth, controlling inflation, and reducing unemployment.
Fiscal policy reforms can be an effective way to achieve these
goals and improve economic performance.

Some suggestions for fiscal policy reform may include:

1. Tax reform - This could involve simplifying or restructuring
the tax code to make it more efficient and fair. This could
include reducing tax rates, eliminating loopholes, and
broadening the tax base.

2. Government spending - This could involve reducing

government spending in areas that are less necessary or
inefficient, such as subsidies or redundant programs. It could
also involve prioritizing spending in areas that are more
critical, such as education, infrastructure, and healthcare.

3. Deficit reduction - Fiscal policy reform may also focus on

reducing the deficit, which is the amount by which spending
exceeds revenue. This could be achieved through a
combination of spending cuts and increasing revenue through
tax increases or closing tax loopholes.

4. Automatic stabilizers - Fiscal policy reforms can also focus

on automatic stabilizers, which are policies that automatically
adjust government spending or taxation in response to
changes in economic conditions. For example, unemployment
benefits automatically increase during economic downturns,
providing economic support to individuals and stabilizing the
overall economy.

In conclusion, fiscal policy reform can be an effective tool for

promoting economic growth and stability. The specific
reforms that are implemented will depend on the country's
unique economic circumstances and political priorities.