PARLIAMENT - The economy is expected to grow by seven percent this financial year, up from the six percent registered last year.

This was announced yesterday by the Minister of Finance and Economic Planning, John Rwangombwa, while tabling the 2010/11 budget in Parliament.

He also revealed that total expenditures will increase to Rwf984billion,

"Total domestic revenues are projected at Rwf 574 billion while the government is expected to generate Rwf187.8billion from indirect tax on goods and services,” Rwangombwa told a joint parliamentary session yesterday.

He said that external revenues to finance the budget will total to Rwf 409 billion with grants amounting to Rwf346billion while the government intends to acquire loans to the tune of Rwf62billion.

Rwanda’s overall fiscal deficit and financing is expected to rise sharply from Rwf77.8 billion (2.4 percent of Gross Domestic Product (GDP) in 2009/2010 to Rwf140.3 billion. This will push up the budget deficit to 4 percent of GDP in 2010/11.

"The expenditures of the State are allocated towards current expenditures, capital expenditures, net lending for policy purposes and payment of arrears,” said Rwangombwa who was presenting his maiden budget since his appointment as Finance Minister.

The government is planning to spend Rwf 8.7 billion on payment of arrears while taxes on external trade have been projected to hit Rwf 43.7billion.

Financial spending with the national resource envelope is categorized into four clusters; infrastructure, productive sector, human development and social sector as well as the governance and sovereignty cluster.

Human development and social sector takes the lion’s share of the budget consuming approximately Rwf306 billion or 31percent of the budget followed by governance and sovereignty cluster with Rwf290billion or 29 percent.

The Infrastructure sector was allocated Rwf242 billion (24.6%) while the productive sector Rwf145billion or 14percent of the total budget.

According to a document from the ministry, during the period ending December 2009, Rwanda generated $140.1 million from coffee, tea and minerals, down from $182.7 million in 2008.

The largest revenue declines for exports, according to Rwangombwa, were significant particularly in the mining sector which dropped by 39.8 percent from $90.7 million in 2008 to $54.6 million last year.

Ends