* Development spending up 23.4 percent
* 12 billion birr ($888 million) on road building
* Focus on electrification, sanitation and health
(Adds details, background)
By Barry Malone
ADDIS ABABA, June 10 (Reuters) - Ethiopia on Thursday proposed a 77.2 billion birr ($5.7 billion) annual budget that targets infrastructure development as part of efforts to maintain one of the fastest growth rates in Africa.
The proposed 2010/11 budget is up 20 percent from 64.5 billion birr in 2009/10.
Finance Minister Sufian Ahmed presented the budget proposal to parliament for debate and it will now be discussed by a parliamentary committee before being put forward by Prime Minister Meles Zenawi for final approval within 15 days.
Although still one of the world’s poorest countries, the Horn of Africa nation says its economy has grown by an annual average of 11.18 percent over the last four years on improved infrastructure and significant growth in investment.
Ethiopia devalued its currency by 10 percent in 2009 to boost foreign reserves.
Ethiopia has been attracting interest from investors, many from China and India, looking to its agriculture, oil and gas exploration and hydropower sectors.
The government says it expects growth of about 10 percent for 2010. The International Monetary Fund predicts growth of over 5 percent.
Opposition parties say the ruling party inflates the growth figures to attract investment and that growth has not filtered down to the poor in a country where last year 13 million out of 80 million people needed food aid.
Of the total budget, 35.9 billion birr will go on development spending, a rise of 23.4 percent, while regular spending climbs 17.2 percent to 17 billion birr.
Just over 24 billion birr will go to Ethiopia’s nine federal regions to spend locally.
The country’s road building program will be boosted by a 12 billion birr ($888 million) investment. Ethiopia has spent $3.6 billion on roads over the last decade.
The development budget would mostly be spent on electrification and the provision of health services and clean water to rural towns, parliament was told.
Some 10 percent of the total is earmarked for developing the country’s crucial agricultural sector. Ethiopia, Africa’s top coffee exporter and second biggest exporter of sesame seed, is mainly reliant on agricultural exports.
The report anticipated 41 billion birr in domestic revenue, 15 billion birr in aid and the rest of the budget being covered by external loans and grants.
The draft budget proposed that defence spending would increase 10 percent to 4.4 billion birr ($352 million), drawing criticism from opposition politicians.
Ethiopia, with the biggest army in the Horn of Africa, is the key U.S ally in the region and entered neighbouring Somalia in 2006 to oust an Islamist group that had taken control of the capital Mogadishu and much of the country.
Prime Minister Meles, who has led the country for almost 20 years, last month won five more years of power in a landslide election victory that the European Union and the United States said was not up to international standards. (Additional reporting by Tesfa-Alem Tekle; Editing by Ron Askew)