Ethiopia's economy is forecast to grow slightly faster in the fiscal year that starts next month, while its budget deficit will increase marginally, its finance minister said on Tuesday.

The East African nation is implementing far-reaching economic reforms, backed by an International Monetary Fund loan programme.

Finance Minister Ahmed Shide told parliament that the economy was forecast to expand 8.9% in fiscal year that runs from July 8 2025 to July 7 2026, up from an estimated 8.4% in the current fiscal year.

A budget deficit of 2.2% of gross domestic product (GDP) is expected versus 2.1% of GDP this fiscal year, while overall spending will be about 1.9-trillion birr ($14-billion) next year, he said.

Despite being one of the fastest-growing countries in the region in recent years, Ethiopia's economy was held back by a devastating two-year war in the northern Tigray region.