The House of Peoples' Representatives (HPR) unanimously approved the proposed 178.5 billion birr (around USD 9.1 billion) for the coming 2014-2015 fiscal year budget earlier this Monday during the last session of the Parliament.
According to the document presented by the Ministry of Finance and Economic Development (MoFED), the new budget saw a 15.3 percent increase of the total budget sum as compared to the previous year's budget sum, with 112 billion birr of the total allocated to regular and capital spendings.
Some 51.5 billion birr has been earmarked to subsidize regional governments, an increase by around 8.5 billion birr from the previous year.
Of the total budget, the federal government will retain 62.5 percent while the remainder will go to the nine regional states and to the two city administrations of Addis Ababa and Dire Dawa.
Some 15 billion birr has also been allocated to support the country's efforts in meeting the United Nations Millennium Development Goals (MDGs) by 2015.
Out of the total sum some, 24.55 billion birr is to be spent on education, up from 22.48 billion the previous year. Meanwhile, health spending will rise 12 percent to 5.15 billion birr and 29 billion birr will be spent on road building.
The new budget was approved following deliberations by MPs in the presence of Prime Minister Hailemariam Desalegn.
The PM on the year's last session of the Parliament said budget revenue would be mobilized from domestic financial resources as well as foreign loans and aid.
"To cover the biggest budget allotted for capital expenditure, the government has plans to collect 43 billion birr (USD 2.1 billion) from domestic revenue, 12.1 billion birr from foreign loans and aid, and the rest will be covered from government treasury," he told MPs.
The budget deficit currently stands at 1.8 percent but the government has claimed that this is not expected to cause inflationary pressure.
In the same development, the nation's inflation rate fell to 8.5 percent from the previous month's 8.7 percent due to a slowing rise in food prices, according to the latest official data released by the Central Statistics Agency (CSA) on Thursday.
The agency indicated that food price inflation slowed to 6.2 percent in the year to June from 6.3 percent in May, owing to a drop in cereal prices.
Inflation of non-food items also slowed to 11 percent in June from a revised 1.5 percent the previous month.