Budget revised upward to keep economy on track

The Government has revised the 2014/2015 Budget Estimates upwards by Rwf6.5 billion to Rwf1759.6 billion as its implementation entered the second part of the financial year. In the revised figures, the government will borrow more money to fund development projects that would otherwise stall due to delays in disbursement of external funding. Presenting the new Estimates before Parliament, yesterday, the Minister for Finance and Economic Planning, Claver Gatete, said the initial budget had partly been affected by delayed disbursements of foreign loans and grants. He said that this necessitated adjustments to ensure that implementation of the second Economic Development and Poverty Reduction Strategy (EDPRS II) remains on track. Chairperson of the parliamentary Committee on National Budget and Patrimony Constance Mukayuhi Rwaka reacts on the budget during the revision. (John Mbanda) There have been changes in both direct donor budget support and capital grants disbursements; with grants now being revised downward to Rwf414.4 billion, which is Rwf130.4 billion less than earlier estimates. In order to bridge this gap, government has proposed to borrow more money with total loans going up to Rwf212.6 billion from Rwf122.8 billion, indicating an increase of Rwf89.8 billion. “This revision reflects the inclusion of Rwf107.1 billion of budgetary loans on account of the expected disbursements from the World Bank and AFDB due to structural change in financing by both institutions as well as a reduction in project loans from Rwf122.8 billion to Rwf105.5 billion,” the Ministry of Finance said in a statement. The ministry now expects a net total reduction of Rwf40.6 billion in Official Development Assistance (Oda) disbursements. Revenue In the revised budget, the minister projects an increase of Rwf11.9 billion in domestic revenue resources and increased domestic financing (domestic public borrowing) of Rwf35.1 billion. While the tax revenue estimates have been reduced by Rwf12.2 billion to Rwf894.6 billion due to what officials described as “reclassification of a portion of the local Government taxes [as] non tax revenue,” for the same reason, non tax revenue estimates have been revised upwards from Rwf 78.8 billion to Rwf 102.9 billion. MP Adolphe Bazatoha comments during the budget revision. (John Mbanda) More non tax revenue is expected from peace support operations to the tune of Rwf8.9 billion. The minister also proposed a slight reduction in both recurrent and development projects by Rwf5.6 billion to Rwf842.6 billion and by Rwf6.1 billion to Rwf784.2 billion, respectively. However, expenditure on both externally financed projects and domestically financed projects increased with the former up by Rwf7.4 billion to Rwf346.7 billion; while the later increases by Rwf13.6 billion from Rwf451.2 billion in the original budget to Rwf437.6 billion. The revised budget has an overall cash deficit of Rwf 295.6 billion compared to Rwf 177.7 billion in the original budget, which is Rwf 117.9 billion deficit increase. Finance Minister Claver Gatete (R) with other officials outside Parliament yesterday. (John Mbanda) Officials at the Ministry of Finance have attributed the increase in deficit to the change in donor budget support funds and the government’s policy not to reduce expenditure fully in line with the decline in total resources. The deficit will be financed by net loans of Rwf197.5 billion and domestic net financing of Rwf98.2 billion. Gatete reassured MPs that the changes will not disrupt projects planned under EDPRS II and the projects that have already been undertaken by the government. Members of Parliament have a few days to analyse the proposed revised budget and enact it into law but most of them already expressed their support. “It’s good that EDPRS II projects were kept as planned,” said MP Theobald Mporanyi. MP Abbas Mukama expressed frustration over foreign donors who have delayed their grants and loans to support the country’s budget. “Donors seem to be doing whatever they want when it comes to disbursing funds, can we learn to depend on our own tax revenues?” he wondered. editorial@newtimes.co.rw

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Budget revised upward to keep economy on track