PRE-BUDGET READING : Expenditure to grow by 10 percent

Rwanda’s Annual Expenditure Is likely to increase by 10 percent in the 2010/11 financial year as government continues to focus on boosting economic growth. Economic growth is expected to rebound to 7 percent this year accelerate further to 8 percent in 2011, after reaching 6.5 percent last year. This year’s budget is second to be aligned to the rest of EAC countries, government expenditures will increase to Rwf 952.6 billion in 2010/11 compared to the previous expenditure of Rwf 849.0 billion. According to an explanation to members of parliament the Ministry of Finance and Economic Planning, says that spending plans will continue to reflect Economic Development Poverty Reduction Strategy (EDPRS) priorities, particularly focusing on priority programmes aimed at boosting economic growth. “In particular, the growth of exports as a means to continue to drive Rwanda’s emergence from the impacts of the global economic crisis,” an explanatory document reads in part. Growth of exports is needed to close in the gap with the country’s worsening trade balance primarily driven by declines in export prices during the financial crisis.Last year, imports outstripped exports pushing up the trade deficit by 20 percent. Statistics indicate that for 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 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. Yet domestic demand for foreign goods increased by 8.2 percent and 17 percent in value and volume terms respectively, mainly driven by huge expenditures on consumer goods, as well as fuel and energy. “Key strategic government investments, particularly in agriculture and export promotion strategies, are expected to boost growth over the medium term,” says the Explanatory note. The trade deficit, however is projected to increase before declining in 2012/13 according the in the medium term outlook forecasts. For agriculture, government will continue investing in the ongoing crop intensification programme, land consolidation and increased fertilizer use. Agricultural production is anticipated to expand by 8 percent this year. While recovery from the global financial crisis remains fragile, ministry of finance says improvements in the domestic liquidity situation and signs of recovery in the export market have helped to promote growth into 2010. The 2010/2011 budget will be presented to parliament this week on Thursday. Ends