Ethiopia's government on Tuesday proposed a 223.3 billion birr ($11 billion) budget for the fiscal year starting on July 8, up nearly 20 percent from the previous year to fund spending on development.
The northeast Africa country's economy is expected to grow by 10.5 percent in 2015-16, according to the World Bank, fuelled by its agriculture and service sectors and state-led investment in big infrastructure projects including roads and dams.
The budget proposal presented by Finance Minister Sufian Ahmed and set to be endorsed by the House of Representatives in the next few weeks sets aside 84.3 billion birr for capital expenditures and 50.2 billion birr for recurrent expenditures which includes administrative, economic and social services.
Addis Ababa plans to spend 32.9 billion birr on education, up from 24.5 billion in 2014-15. Health spending will increase to 6.3 billion from 5.1 billion, while more than 2.3 billion birr will go on urban development including housing.
State-run Ethiopian Roads Authority will be allocated 33.1 billion, up from 29 billion in the fiscal year soon to end.
Africa's second-most populous nation after Nigeria aims to expand its road network to 136,000 kilometres by the end of this year, well up from 50,000 kilometres just five years ago.
Major projects begun in the past decade include a number of dams such as the 4.1 billion US dollars-Grand Renaissance Dam that will eventually produce 6,000 MW of power, and a plan to construct over 5,000 kilometres of railway links crisscrossing the country.
Some economists say Addis Ababa must make room for more private enterprise, which would also help keep down public debt.
The International Monetary Fund said last year the country was "on the cusp" of shifting from low to moderate risk of debt distress. Total debt at about 50 per cent of GDP was still manageable but tougher if it rose much more, the IMF said.