Djibouti's cabinet has approved an amended 2026 budget that cuts spending by 3.8 billion Djibouti francs after revenue fell nearly 13 billion francs short of forecast by May. It has also given 1.8 billion francs to a development fund that has made no new loans since 2016.
Djibouti's Council of Ministers, chaired by President Ismail Omar Guelleh on 27 October, approved a draft amended budget law for 2026. The law balances revenue and spending at 168.48 billion Djibouti francs (about US$948 million), down from 172.30 billion francs in the original finance law, according to the presidency's official record of the meeting. The net cut of 3.82 billion francs is 2.22%.
Why the budget was cut
The record says there were "significant gaps" between forecasts and results. By the end of May, general revenue (including grants but excluding loans) stood at 55.20 billion francs against a projection of 68.08 billion, a shortfall of 12.88 billion. Domestic revenue alone was 10.18 billion francs below target. Spending, meanwhile, ran above the planned path, mainly because of current and operating costs. The cut comes mostly from lower domestic resources, partly offset by higher external resources.
The government projects growth of 5.9% in 2026, down from 6.5% in 2025. It warns that the outlook is exposed to disruption of maritime trade, higher freight and energy costs and slowing regional demand, all significant for an economy built on ports that handle most of Ethiopia's trade. To raise revenue it plans to widen the tax base, improve VAT yields, continue digitising the tax and customs services, and tighten controls on fraud and evasion. The amended budget goes to the National Assembly for a vote.
The same session approved a new organic law on finance laws. It introduces programme budgeting, multi-year planning and online publication of budget data, and strengthens oversight by parliament and the Court of Accounts.
Youth enterprise fund
The cabinet also approved a decree giving 1.8 billion francs (about US$10 million) to the Djibouti Economic Development Fund (FDED) to finance young entrepreneurs and small businesses. The record says the fund has made no new loans since 2016 and has focused on recovering its old portfolio. Priority sectors include agriculture, livestock, fishing, tourism, renewable energy, logistics, digital services and the circular economy, and the fund must report on beneficiaries, jobs created and amounts recovered.
At National and African Youth Day on 1 November, Guelleh said the government would strengthen financing and support for young entrepreneurs and help those in informal work build "structured and sustainable" businesses, the state news agency ADI reported. "The road ahead is still long," he said (CERHA translation from French).
The cabinet postponed regional and municipal elections to April 2027 at the same 27 October session, and the commentary site Mereja Media noted that the youth fund, not the budget cut, drew most attention online.
Photo: President Ismail Omar Guelleh, May 2010. Robert D. Ward, US Department of Defense, via Wikimedia Commons, public domain.