The public sector is set to see a salary adjustment of up to 300pc to its employees in hopes of addressing the cost of living that arises amid new macroeconomic reforms.

Prime Minister Abiy Ahmed (PhD) disclosed 90 billion Br allocated for this wage increment in the supplementary budget bill, which will be presented to Parliament. The Prime Minister emphasised that the salary adjustment is intended to support economic classes who will bear the weight of short-term economic shocks. He noted that civil servants, particularly those in lower positions within federal agencies, are the first bearing the brunt of inflation.

"This is the first time in history," he said.

Abiy acknowledges the struggles of civil servants earning as little as 1,500 Br, stressing the necessity of the wage increment. This move comes as his administration liberalises the foreign exchange regime to achieve macroeconomic stability and reduce inflation, ultimately promoting a sustainable economic environment. He said: "However, it won't be an easy road."

The Prime Minister pointed out that the reform has been long overdue, with deep-seated economic structural issues persisting for years. He acknowledged that the country would experience short-term hardships before achieving economic sustainability.

"It will be tough for a short while," he said, "but it will bear benefits."

Yigezu Jemaneh, head of work evaluation and payment research at the Civil Service Commission, stated that implementation plans are pending. He noted that wage increases would vary, with those in lower positions seeing more increments, while higher-level employees may not see any adjustment.

"We have to wait until the finances are disbursed," he said.

Last week, a high-level discussion aimed to clarify the new reforms. Fitsum Assefa (PhD), minister of Planning & Development, reviewed the past performance and the rationale for the reforms. She disclosed that despite challenges, the home-grown economic reform had led to increased tax revenues, a reduced debt burden, and a rise in exports. However, she also acknowledged ongoing structural issues, including a balance deficit between exports and imports, the proliferation of illicit foreign currency, and a lull in investment performance.

Fitsum justified the reforms as necessary to address deeper structural issues and promote investment efficiency. She emphasised that while short-term shocks are inevitable, long-term sustainability is promising. The government aims to increase federal income, streamline tax policy, control government expenditure, and manage debt effectively.