Budget revision for 2026

Djibouti has reduced its 2026 budget to 168.48 billion Djibouti francs (FDJ), or about 944.6 million dollars, a 2.22 percent drop from the original 172.30 billion FDJ. This adjustment reflects the government’s effort to align spending with available resources and improve financial stability.

Revenue shortfall reported

Public revenues, including donations but excluding loans, reached 55.20 billion FDJ by the end of May 2026, below the expected 68.08 billion FDJ. This represents a shortfall of 12.88 billion FDJ, with domestic revenues alone falling short by 10.18 billion FDJ.

Spending adjustments planned

The government plans to reduce expenditures to match observed needs and partially offset the decline in domestic revenues by increasing external financing. It also aims to improve tax collection through expanding the tax base and digitizing tax and customs systems.

Focus on tax reform

Efforts to strengthen tax mobilization include improving value-added tax (VAT) collection, combating tax evasion, and reducing certain exemptions. These measures are part of a broader strategy to boost public revenues amid high debt levels.

High debt and IMF recommendations

Public debt accounted for 68.9 percent of GDP in 2024 and 67.2 percent in 2025. The International Monetary Fund (IMF) recommended in January 2026 that Djibouti improve tax collection, reduce exemptions, and better control spending to ensure debt sustainability.

Economic slowdown expected

Djibouti’s economic growth is projected to slow to 5.9 percent in 2026, down from 6.5 percent in 2025. The economy remains heavily reliant on port and logistics services, which face risks from disruptions in maritime trade and rising costs.

Debt ratio projected to decline

According to IMF data, the public debt ratio is expected to fall to 62.3 percent of GDP in 2026, reflecting the government’s efforts to balance its finances and reduce reliance on external borrowing.