The Minister of Finance and Economic Planning, Dr. Uzziel Ndagijimana, will this Monday unveil the National Budget for the 2020/2021 fiscal year, The New Times can reveal.
The budget reading comes 10 days after Kenya, Uganda and Tanzania unveiled theirs in a move that saw Rwanda break away from what has now become tradition due to different challenges that are mostly related to Covid-19 and natural disasters.
Rwanda confirmed its first case of coronavirus on March 14. The number has since grown to 639 countrywide.
The Chairperson of the Committee on National Budget and Patrimony, Omar Munyaneza, told The New Times in a telephone interview that Covid-19 had come with a set of challenges that were worsened by natural disasters.
"There were challenges of Covid-19 and of course the natural disasters which all had to be factored into the budget as both were unexpected. However, the unveiling is being done within the timelines set by the law which stipulates that the budget should be published in the national gazette by June 30,” he said.
Between January and April alone, a series of disasters killed at least 140 people, destroyed at least 3,117 hectares of crops, 124 roads and 64 bridges disrupting economic activities across the country.
Budget expectations
Like his counterparts, Ndagijimana is expected to table spending plans for the 2020/2021 fiscal year this month and next, focusing on reviving the economy and livelihoods battered by the Covid-19 pandemic.
The budget is expected to generally reflect measures announced in response to the coronavirus (Covid-19) pandemic and include stimulus packages and social safety net programs.
The budgets also reflect proposals for tax and customs measures including certain revenue raising and expenditure provisions.
Presenting the National Budget Framework Paper to lawmakers on May 21, Ndagijimana said that the government is expected to spend Rwf3, 245.7 billion in 2020-2021 fiscal year, which is Rwf228.7 billion higher than the revised budget estimates of Rwf3, 017.1 billion.
Of this, Rwf1.8 trillion (55.5 per cent of the budget) has been tentatively set aside for all economic transformation activities for July 2020 - July 2021 financial year.
"In line with the plan to address the impact of COVID-19 on the economy and the well-being of the people, the budget for 2020-2021 will focus on implementing the government’s economic recovery plan,” Ndagijimana said.
Ndagijimana said growth was expected to rebound next year to 6.3 per cent and improve further to 8 per cent in 2022, thanks to the recovery plan that has been laid down.
Under the economic recovery plan, the government had said that the total Covid-19 related cost was estimated to be at Rwf882 billion over the next two fiscal years.
The government plans to increase public spending by 7.5 per cent in the 2020-21 fiscal year to Rwf3.245 trillion, according to the budget framework paper.
Increased spending is expected to support sectors that generate more job creation.
Under the preliminary spending plan, some Rwf 7.2 billion will be invested in Rwanda Development Bank in the, while the national carrier RwandAir whose operations have been adversely affected by the pandemic is expected to get a Rwf145.1 billion boost.
In a recent interview with The New Times, Angello Musinguzi, a tax expert at KPMG Rwanda, proposes that Rwanda Revenue Authority expedite tax refunds for taxpayers citing delay for some companies.
He believes it is also critical to consider giving relief for Value Added Tax (VAT) for companies in the hospitality industry such as hotels.
"It can be reduced VAT rate for them or a year or two of VAT grace period to enable them recover from Covid-19,” he says.
Joseph Nkurunziza, the Chairperson of the Rwanda civil society platform, told this publication that health spending should be directed towards specialised health services, infectious diseases prevention and control, health service delivery and quality improvement, and maternal child and adolescent health.
He suggests budgeting for tax cuts on things like water and electricity in the next fiscal year.
"Taxes should be reduced on water. Water is very expensive. Tax reduction will enable citizens to access water which is a basic requirement during Covid-19,” he noted.
Nkurunziza insisted that the government should "remove taxes on soap and sanitizers to make them affordable during Covid-19.”
Meanwhile, Rfw960.4billion (29.6 per cent of the budget) will go towards supporting social transformation activities, while Rwf482.7billion (14 per cent) has been directed towards governance activities.