Ethiopia's government expects overall spending will rise next fiscal year mainly due to costs related to ​the Iran ⁠war, its finance minister said on Thursday.

Minister Ahmed Shide ‌said in a budget speech that overall spending was projected to rise to roughly ​2.34 trillion birr ($14.69 billion) in the 2026/27 fiscal year that starts next month, ​from 1.92 ​trillion birr in the current fiscal year.

"This increase mostly takes into account expenses related to the Middle East crisis," the ⁠minister told lawmakers.

He did not elaborate on the costs caused by the Iran war, but the government has increased fuel subsidies since the war started.

A budget deficit of 1.4% of gross domestic product ​is expected next ‌fiscal year, ⁠smaller than the ⁠deficit of 2.2% of GDP the finance ministry forecast a year ago for ​this fiscal year.

The government predicts economic growth of ‌10.1% next year, similar to this year's ⁠growth.

Ethiopia's export revenue over the first 10 months of this fiscal year stood at $8.7 billion, Ahmed said, and by the end of the year the country expects to earn $10.5 billion from its exports.

The Horn of Africa country's export figures are closely watched by markets as they have been at the centre of a row between bondholders and the government over whether Ethiopia faces an insolvency problem ‌or a liquidity issue.

Restructuring talks over Ethiopia's $1 billion international bond ⁠hit another stumbling block last month when ​bondholders rejected the government's latest offer.

Some bondholders are planning to take legal action.

"Debt restructuring negotiations, including with Eurobond creditors, are currently underway, and ​we are ‌close to reaching an agreement with some of them," ⁠Ahmed said.

($1 = 159.3150 birr)