What the Rwf1.7 tn Budget will do

Infrastructure and export promotion are among the priorities high on the agenda of the 2014/15 budget, which the government tabled in Parliament yesterday. The government plans to spend Rwf1.75 trillion in the next financial year, representing Rwf 75.5 billion increase from the Rwf 1.6 trillion in the 2013/14 revised Budget. The Minister for Finance and Economic Planning, Amb. Claver Gatete, presented the Budget to a joint plenary session of Members of Parliament and Senators in Kigali. “We have made sure to cater for exports’ increase. Everything we are planning to do leads towards that (increasing the export base,” Amb. Gatete said. Total domestic resources in the country’s next Budget are estimated at Rwf1.08 trillion, which accounts for 62 per cent of the total Budget. The 1.08 trillion in domestic resources for the budget include projected tax revenue worth Rwf906.8 billion, non-tax revenue worth Rwf79 billion, domestic financing worth Rwf95.6 billion, and net lending worth Rwf4 billion. External resources are projected at Rwf667.6 billion, which accounts for 38 per cent of the total Budget, down from 40 per cent last year. Step in right direction? The Budget left Rwandan policymakers pleased with the step toward self-reliance. “It’s good that the Budget planning is in line with our need for self-reliance,” MP Saleh Habimana said during the legislators’ reactions after the presentation. Total grants account for Rwf544.8 billion, representing 31 per cent of the external resources, while total external loans equal Rwf122.8 billion, representing 7 per cent. The government has planned to spend 52 per cent (Rwf915 billion) of the entire next Budget on funding four thematic areas of the country’s second Economic Development and Poverty Reduction Strategy (EDPRS2). The four areas, which have been identified under the plan as the main pillars for fast-tracking the country’s progress toward attaining middle-income status by the year 2020, include Economic transformation to boost rapid growth, rural development, productivity and youth employment creation as well as accountable governance. Rural development The government has hence planned that the 2014/15 Budget will fund projects in line with the EDPRS2 pillars such as energy, agriculture, exports promotion, urbanisation and rural settlement, employment programme and skills development, including technical and vocational education, social protection and graduation from poverty as well as the promotion of green economy. If tied to their respective thematic areas under EDPRS2, projects about economic transformation such as urbanisation and rural settlement, energy production, increasing exports, and developing the private sector have been allocated 25 per cent of the total National Budget at the tune of Rwf438.9 billion. The rural development area, whose main goal is to improve the quality of life and economic wellbeing of people living in rural areas, will be allocated Rwf252.8 billion, which represents 14 per cent of the total Budget. MP Theobald Mporanyi lauded the planned investments in the rural development as crucial in reducing the number of young people who tend to move to cities like Kigali looking for jobs and the excitement of a city. “A developed rural area will reduce rural exodus. It’s good that has been thought about in this Budget,” Mporanyi said. Agriculture The government has allocated 10 per cent of the total resources (170.3 billion) to the productivity and youth employment thematic area, whose goal is to move Rwanda from agriculture-based economy to an industry and services-based economy and targets to create additional 200,000 off-farm jobs every year. The fourth thematic area for EDPRS2, accountable governance, has been allocated 3 per cent of the total resources (Rwf53.1 billion), funds that will be invested to promote citizen participation and mobilisation for delivery of development, strengthening public accountability and improving service delivery. But the 2014/15 Budget, which will run under the government-coined theme of “Infrastructure development to accelerate export,” is projected to close with an overall cash deficit of Rwf177.2 billion. The deficit for the next fiscal year will be lower by Rwf 94 billion in comparison with the deficit for the revised 2013/14 budget that stood at Rwf 271.2 billion. Amb. Gatete said the deficit in the next fiscal year will be financed with net foreign loan receipts of Rwf 107.6 billion while the domestic borrowing will contribute Rwf69.6 billion. The minister said in a statement related to the Budget speech in Parliament that the 2014/15 Budget “reflects government’s focus on implementing strategic policies aimed at addressing the infrastructure needs in order to increase export of goods and services.” Legislators have until the end of this month to strike their vote on the proposed budget to enable its implimentation for the next financial year that starts July 1.