Inclusive Budget

The government plans to spend Rwf 1.6 trillion in the 2013-2014 fiscal year. This, according to Finance Minister Amb. Claver Gatete, is Rwf 103 billion higher than the 2012-2013 revised budget at 1.5 trillion.Under the new budget, the government is proposing to spend 50 percent of the resources under the next fiscal year to fund the second phase of the Economic Development and Poverty Eradication Strategy (EDPRS II), which is critical to Rwanda’s long-term goal to attain middle-class income status by 2020.“You will find that most investment plans are good for economic growth,” Amb. Gatete told MPs as he presented his maiden Budget yesterday in Kigali.The allocation of resources to the EDPRS II which will take half of the budget has been planned, taking into account the plan’s four thematic areas of economic transformation (Rwf 459 billion), rural development(Rwf 164 billion), productivity and youth employment (Rwf 163 billion), as well as accountable governance(41billion).The government has allocated 37 percent of the next budget to what the Ministry of Finance and Economic Planning has called ‘foundational issues’ in the country’s life such as health, education, and social protection among others, while support functions such as paying civil servants among other government business has been allocated the budget’s remaining 13 per cent.The government has thus planned to heavily invest in activities such as the generation of electric energy, the construction of feeder roads and food stores in rural areas, training of the youth on technical and vocational skills, rural industrial parks, and national cyber security. “There are many activities we would like to undertake to support growing sectors,” Amb. Gatete said.He said the government would like to see the country’s banks, stock markets, and commodity exchange markets enjoying highly reliable skills of Rwandans to be trained in Information and Communication Technology (ICTs) while electricity in the country would also become reliable enough to support the planned growth.EDPRS II aims at achieving 11.5 per cent annual economic growth over the next five years with the country’s GDP per capita planned to increase from the current $644 to $1,240 by the year 2020.Resilient economy despite global economic challengesThe minister highlighted that the country’s next budget has been prepared within a context of the country’s aim to be self-reliant as major donors continue to face economic challenges.Rwanda’s total domestic revenues for the next fiscal year have been estimated at Rwf 994.9 billion which is 60.2 per cent of the total budget, leaving external resources accounting for only 39.8 percent of the total budget or Rwf 658.6 billion.Inflation is projected to also rise gradually to 7.5 per cent by the end of 2013 as the country continues to struggle with a high importation rate without a corresponding rate of exports.As a result, the country’s economic growth is projected to slow to 7.5 per cent in 2013 from 8 per cent, while a decline in services is imminent due to cuts in credit to the private sector resulting from the tighter fiscal and monetary policies.“Current world developments including a weaker global economy and a prolonged crisis in the euro zone could reduce our commodity export earnings, donor aid flows, migrant remittances and foreign direct investment flows,” Gatete said, highlighting that the volatile global economic situation could impact negatively on the country’s domestic economic performance. “It is in the light of these global developments that we have chosen the theme ‘striving for self-reliance and dignity’ for the budget and economic policy statement for this fiscal year 2013/14,” he added.Taxes on construction and telecom materials went up as those on food dropped. Amb. Gatete said the changes will be implemented “progressively” to effectively harmonise with other tax regimes in the EAC.Legislators have until the end of this month to strike their vote on the proposed budget to allow the next fiscal year to naturally start on the 1st July.

National

Inclusive Budget