PARLIAMENT - The Government of Rwanda is planning to spend Rwf 812.4bn on development for the 2009/2010 financial year in its first fiscal year alignment with the East African Community (EAC).

The financial year in the EAC runs from July 2009 to June 2010.

Presenting the Draft Budget Framework Paper and estimates to members of the two chambers of Parliament, Finance Minister James Musoni said that the 09/10 Budget will see a decline of 2.7 percent in total revenues and grants compared to the 2008/09 budget estimates as a result of the current financial crisis.

According to Musoni, domestic revenues consist 46 percent of the total expenditure while grants make up 45 Percent of the available resources.

External borrowing takes up to 6.5 percent, domestic borrowing 0.2 percent while cash from reserves takes up 2.3 percent of the estimated expenditure.

"The 2009/10 Budget is projected to be ‘stringent’ compared to last year’s budget as a result of the global financial crisis. Households and businesses are growing under financial stress and GDP projections are being revised downwards,” Musoni told the joint session.

He further said that Government would be mindful in its spending and has prioritised areas to spend during the Medium Term Budget Policy until the global situation stabilises.
"The Medium Term Budget Policy is in line with Rwanda’s development strategy, EDPRS. Focus has been put on the development of physical infrastructure to enable the business environment and reduce the cost of doing business in Rwanda” Musoni revealed.

2009/10 Budget Policy proposals show that Government has increased spending on physical infrastructure from 20.2 percent to 21.8 percent, above the EDPRS target of 19.7 percent of the total budget.

Over Rwf 256bn is expected to be spent on energy generation and distribution, roads, ICT development, regional infrastructure among others.

Spending on the productive sector is also expected to increase from 8.6 percent to 9.7 percent.

Efforts will be directed towards value addition and crop intensification programmes, supporting Agri-business, credit access in rural areas, land tenure and consolidation reforms as well as supporting the manufacturing and financial industries.

Good Governance sector will take the biggest portion of projected spending in the next financial year with an estimated Rwf 464.9bn to be spent on the implementation of the Joint Governance Action Plan.

Funding to the sector increased from 36.2 percent to 42.3 percent.

"Focus here will be directed towards supporting activities that will help consolidate good governance, strengthening the rule of law, enhancing accountability and service delivery among other things, bearing in mind that Rwanda will be going to Presidential polls next year,” Musoni further said.

Spending on the human development and social sector is also expected to go up from 28.9 percent to 31.7 percent where among other things, focus will be put on improving the quality of the 9 year basic education, strengthening post-basic education programmes like TVET, health insurance (Mutuelle de Sante) and Human Resource Development programmes.

Rwanda’s economy which grew by double digits of 11.2 percent in 2008 but is now expected to reduce to 5.7 in 2009.

"The severity and duration of the global financial and economic crisis will remain uncertain, projections for growth continue to be revised downwards as commodity prices continue to show a declining trend according to figures by IMF and World Bank” Musoni said.

The House presided over by the Speaker Rose Mukantabana took time to give their views and opinions.

The Chairperson of the Budget Parliamentary Budget Committee, Constance Mukayuhi Rwaka, urged government to allocate more spending towards supporting the productive sector because outcomes such as good quality harvests are capable to reducing the shocks from the crunch.

The draft budget is set to undergo further discussions and possible changes and will be read on July 11, simultaneously with the other four EAC member states. 

Ends