The Government plans to spend Rwf2,094 billion in the Financial Year 2017/18, which is Rwf140.7 billion higher than the Rwf1,954.2 in the 2016/17 Revised Budget.

The Minister for Finance and Economic Planning, Amb. Claver Gatete, made the disclosure during the presentation of next financial year’s Budget Framework Paper (BFP) before both chambers of Parliament yesterday.

The resource allocation is in line with the second Economic Development and Poverty Reduction Strategy (EDPRS II) priorities and is expected to contribute toward attaining EDPRS II targets as well as forming the basis for Vision 2050 and EDPRS III.

The 2017/18 domestic revenue is projected at Rwf1,316.8 billion, representing an increase of Rwf130.5 billion compared to Rwf1,186.3 billion spent in the 2016/17 Revised Budget.

Total grants are estimated at Rwf356.7 billion compared to Rwf326.6 billion in 2016/17 Revised Budget, indicating Rwf30.1 billion increase.

Total external loans are estimated at Rwf362.8 billion in 2017/18, a decline of Rwf12.3 billion compared to the estimate in 2016/17 Revised Budget on account of revised projections based on the status of the execution of projects.

Recurrent expenditure is expected to increase by Rwf111.7 billion from Rwf1,028.0 billion in 2016/17 Revised Budget. This rise is attributed to increase in wages and salaries, worth Rwf42.7 billion, resulting from the implementation of the new teachers’ statute, new government agencies as well as restructuring.

Development budget is estimated at Rwf757.2 billion in 2017/18 from Rwf741.9 billion in the 2016/17 Budget, a Rwf15.3 billion increase.

Domestically financed development projects expenditure is set to increase by Rwf46.7 billion from Rwf398 billion in 2016/17 to Rwf444.7 billion in 2017/18.

The increase will be used to purchase strategic stocks for food security, construction of several valley dams and cater for expropriation for the construction of the Bugesera International Airport.

The National Budget will be read in June.

Breaking free of donor aid

Presenting the Budget Framework Paper, and the medium term budget estimates for 2017/18 and 2019/20, Amb. Gatete said that tax revenue should be credited with financing most of the National Budget, thanks to investor confidence in the country’s economic growth.

Gatete outlined the economic policies over the medium term to help lay the foundation for the next fiscal budget. He said revenue collected had slightly exceeded what was estimated, noting that there was hope that the country would break the shackles of external support.

"Revenue from taxes has been increasing year-after-year and as the economy grows, so does the number of people who are paying taxes. For instance, domestically, the contribution is 66 per cent. Donations continue to reduce and, currently, they stand at 14 per cent, an indication that with more effort, we will get where we want to be,” he said.

Total revenue between July and December 2016 stood at Rfw764.3 billion compared to the estimated Rfw762 billion.

Of this, Rfw508.6 billion was tax revenue and grants, at Rwf165.2 billion, an increase from the expected Rfw158.3 billion.

The economy

To prepare the draft, Gatete said EDPRS II, Sustainable Development Goals (SDGs), the government seven-year plan (2010-2017) and the Rwandan and world economies were put into consideration.

"The World economy has grown at 3.1 per cent rate in 2016 mostly because of emerging markets rising by 4.7 per cent. sub-Saharan countries improved by 1.6 per cent in 2016, which is at less than the 3.4 per cent that was attained in 2015. Rwanda’s economy grew by 5.9 per cent in 2016, a slight difference from the 6 per cent growth that was projected,” he said.

Generally, the services sector was the most productive, growing by 7 per cent, agriculture grew by 4 per cent (largely thanks to unstable weather that resulted in prolonged drought in Eastern and Southern provinces), and the industrial sector grew by 7 per cent due to an increase in industries as a result of the promotion of Made-in-Rwanda products, the minister added.

The Government’s priorities for growing exports will be to diversify exports, increase value addition and promote Made-in-Rwanda products through collaboration with private-sector.

"In the short to long run, promotion of Made-in-Rwanda will help to consolidate private sector domestic activities, create jobs and boost economic growth,” Minister Gatete said.

Key targets and interventions will include growing traditional exports to 19 per cent, promoting non-traditional exports, growth of the service sector by 33 per cent as well as cross cutting interventions such as promotion of locally-made products, developing cross border and trade logistics infrastructure and development of industrial parks among others.

Reacting to the draft, MP Jean-Marie Vianney Gatabazi advised the minister to look into high bank interest rates, which he said have a negative impact on the economy.

"The fact that we can fund the biggest chunk of our budget is something that we should be happy about. However, I would like to talk about high bank interest rates which, if not looked into, can destroy our economy,” he said.

MP Pelagie Mukantaganzwa touched on the issue of old debts that the government had accumulated from expropriations.

"In our working trips all over the country, we always meet people who the government owes money from expropriation activities from years back, why don’t we use this budget to pay them so that we deal with this issue once and for all?” she wondered.

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