The National Budget for Financial Year 2017/18 has been planned with a target to improve infrastructure and facilitate local industries to scale up the manufacturing sector, analysis of the Budget, read yesterday, shows.

The Minister for Finance and Economic Planning, Claver Gatete, presented the Budget in Parliament, asking the MPs to approve slightly more than Rwf2 trillion Budget to fund the country’s operations in the next fiscal year.

The Budget, that the House will have to assess and approve before the end of the month in time for the start of the 2017/18 fiscal year on July 1, shows the Government’s intention to increase spending by Rwf140.7 billion compared to the closing financial year Budget.

From the current financial year’s Rwf1,954.2 billion to Rwf2,094.9 billion proposed for the 2017/18 fiscal year, Minister Gatete asked Parliament to approve the Budget upward.

Gatete told a joint session of deputies and senators in the House yesterday that economic plans laid out in the 2017/18 Budget will generally focus on promoting investments in infrastructure and locally-made products.

That’s why the theme for the new Budget is "Sustainable growth through infrastructure development and promotion of Made-in-Rwanda.”

To that end, the Government plans to invest heavily in infrastructure projects such as constructing and upgrading roads and airports, rolling out electricity access in more areas, providing clean water to more citizens, and preparing more industrial parks upcountry.

"We are undertaking significant investments in infrastructure, whether it’s water and sanitation, electricity, or roads because we think these infrastructural projects are critical for economic transformation,” Gatete told the legislators.

Among the major projects planned for are ongoing construction of Bugesera International Airport, expansion of Kigali International Airport, and refurbishment of Kamembe Airport.

It will also throw funds towards completion of the construction of Kivu-Belt asphalt road in Western Province, start the construction of Ngoma-Nyanza, Base-Butaro-Kidaho, and Nyagatare-Rukomo asphalt road networks, and fund electrification lines to boost the current national energy roll-out programme.

Tax waiver for local industries

To boost local production and support domestic industries, the Government has put a zero taxation regime on importing goods most needed by local industries such as garments and leather processing machines.

Importing wheat grains and sugar, public transport buses and transit goods vehicles like trucks, road construction heavy machines, as well as telecommunication and electronic equipment such as Points of Sale (PoS) and ATM will also be tax exempt.

The tax cuts were welcomed by most parliamentarians, who see in them an opportunity for local industries to grow, leveraging access to both imported raw materials and technology.

"There are many important projects in the Budget that might improve people’s lives if well implemented,” said MP Juvenal Nkusi, the chairperson of the Public Accounts Committee.

He welcomed the tax cuts, especially in the areas of telecommunication and for goods that are most needed by local industries which need to be promoted in line with the Made-in-Rwanda campaign.

Budget sources

The Government expects to finance 66 per cent of the 2017/18 Budget domestically through tax and non-tax revenues, while it expects 17 per cent of the Budget to come from both domestically and externally generated loans, and the remaining 17 per cent obtained from foreign grants.

Gatete noted the country’s positive direction toward self-reliance as the 66 per cent rate in the Proposed Budget is an improvement from the current fiscal year’s 62 per cent of domestically secured revenues for Budget funding.

"The Government’s objective is to reduce the reliance on external donor support. However, for the time being this support remains vital for our development,” he said.

The boost in domestic revenues is attributed to a projected Rwf118.9 billion increase in tax revenue collection for the next fiscal year, hence the government has targeted to collect Rwf1,200.3 billion in taxes, up from the current fiscal year’s Rwf1,081.4 billion.

Total grants in the next fiscal year are estimated at Rwf356.7 billion compared to Rwf326.6 billion in 2016/17 Revised Budget.

Minister Gatete said the Government’s expenditure policies in 2017/18 are guided by the country’s priorities as laid out in its second Economic Development and Poverty Reduction Strategy (EDPRS II).

The minister said a significant portion of the Budget will be allocated toward EDPRS II priorities such as accelerating economic transformation, developing the rural sector, and promoting youth employment and accountable governance.

Critical issues that affect citizens daily and constitute the basis of their future such as health, basic education, food security and nutrition, governance decentralisation, stable public finance management as well as peace and security have also attracted crucial funding in the budget.

The 2017/18 draft finance law, which Parliament approved in principle yesterday, was designed based on the 2017/18 – 2019/20 Budget Framework Paper that the Government presented to Parliament in April, and was amended to reflect recommendations from MPs as submitted on May 30.

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