Rwanda News Agency/Agence Rwandaise d'Information (Kigali)
18 March 2008
Kigali — The multi-million cheque handed to government from the sale of state telecom Rwandatel is safe in the treasury awaiting to be invested in infrastructure and agriculture, RNA reports.
Last year, Government unexpectedly received a $100 million bid from Libyan firm LapGreen Networks for the struggling provider out-weighing others from South Africa, Uganda and Rwanda. According to officials, a $50million down payment was received in November as per the sale agreements.
Government has now informed the International Monetary Fund that the $15million budgetary allocation for a nationwide broadband backbone will be tapped directly from the Rwandatel moneys.
Under this project due for completion in 2009, rural Rwanda will be connected up using fiber optics. Government says the project will "improve efficiency in the way local government operates, including through strengthening information sharing and coordination between local and central governments, particularly in public financial management.
A modern management system for utility provider Electrogaz is to be established from the same project to ease service delivery and expand its outreach.
"Over time it is expected that the availability of this ICT backbone will also provide a platform to induce new economic activity, especially in previously under-serviced rural areas", government said in its February 12 Letter of Intent to the Fund.
Government is also preparing a 3-year investment project in agriculture to focus on land-husbandry, water harvesting and hillside-irrigation. With costs for the program projected at $100 million, government told the IMF that it does not want to accumulate debt unnecessarily.
"To mitigate the future debt burden, we also intend to use some of the receipts from the privatization of Rwandatel for the partial financing of this project", Kigali said. "We will explore all possible sources of financing, including grants and concessional borrowing from our development partners."
More tax payers
Despite recent chaos in Kenya that has been the entry point for most of Rwandan imports - thereby slightly affecting economic activity, as well as shaky oil prices, officials here expect to collect more revenue inform of taxes.
It is anticipated that there will be an increase in the revenue-to-GDP ratio by 0.2 percentage points to 13.7 percent of GDP. Up to 54 percent of the $1.2 billion 2008 budget is financed by donors.
"Should unanticipated revenue losses arise, we will implement offsetting measures-including increasing fees and charges-so that the 2008 revenue target can be attained", Government told the IMF. The authorities want to widen the tax base.
Under this program, the Rwanda Revenue Authority is developing a comprehensive compliance program designed to identify risks of noncompliance in paying taxes. Execution of the program includes enhancing the SIGTAS computer system to strengthen information analysis and, undertaking risk based audits.
Service delivery to our taxpayers is to be improved, for example, according to Kigali, by refunding VAT claims promptly and enforcing tax regulations consistently.
"We will develop by June 30, 2008, a comprehensive program for the medium-sized taxpayers (benchmark), expanding the segment to include all taxpayers above the RF20 million VAT threshold", the Fund was told.
This is expected to increase the number of taxpayers in this segment from 200 to 900, government said. To achieve the revenue target, no further tax exemptions will be granted and the existing ones will be carefully managed, as the authorities maintain.
The facilitate trade to rise the tax base, government will implement by June 30, 2008 an expedited clearance scheme (super green/gold card) for compliant importers contributing between 40 and 60 percent of import value (benchmark).
Last year, the revenue collection body collected Rwf 248billion (about $460 million) from both taxes on goods and services. The body has set a target of Frw264.8bn in projected tax collections this year.
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