David Kezio-Musoke
4 November 2008
Rwanda last week read $687.2m (Frw378.3b) transitional mini-budget that will run from January to June 2009.
The sixth month budget was read as a way of allowing the country to prepare itself for the smooth alignment with the East African Community (EAC) budget calendar.
The reading comes months after Rwanda's cabinet approved the preparation of a mini-budget to bridge the country's transition to the EAC's.
Rwanda acceded to the East African Community (EAC) Treaty on June 18, 2007 and became a member of the community with effect from July 1 2007.
The country's commitment to fully align with the EAC budget calendar by July 2009 is one of the prerequisites of harmonising with EAC's policies and processes.
Uganda, Kenya and Tanzania read their budgets on the same day in June, the same time when their new financial years begin.
Rwanda's fiscal years having been (until June 2009) been running from January to December.
Burundi the other new entrant to the EAC bloc is yet to align to the EAC budget calendar.
The Minister of Finance and Economic Planning James Musoni on Thursday while presenting the estimates for the six months expenditure to parliament said domestic resources would be estimated at $358m (Frw 197b) compared to external resources at $329m (Frw 181.3b).
The budget's allocations according to the Rwanda's Economic Development Poverty Reduction Strategy (EDPRS), priorities are shared out in four separate sectors with governance and sovereignty having the highest budget allocation of 36 per cent.
Despite this the governance and sovereignty take a lion share in the 2009 mini-budget with $247m (Frw 136.7b) billion, a drop from the 2008 allocation of $478m (Frw 263b).
Others include human development allocated with 32 per cent while infrastructure and productive capacities have been allocated 24 per cent and 8 per cent respectively.
Also in Rwanda's new budget proposal, tax receipts were also estimated at $301m (Frw166.2b), accounting for 44 per cent of the total budget.
According to the Finance Minister, the increase is due to the good performance and improvement in tax administration but also high process of goods and services that have had a positive impact on taxes.
"Governance spending has been reduced due to falling loan repayments and exceptional expenditure related to post-conflict," Mr. Musoni said.
Emphasis on this allocation, according to Mr. Musoni will be on improving and promoting community policing, support to functioning of government institutions, strengthening fiscal decentralisation policy by increasing to districts and continued participation in peace keeping missions.
In the mini-budget non-tax revenues are estimated at Frw16.5 billion, representing a fall of 4 per cent as compared to the 2008 revised budget.
The biggest fall according to the 2009 mini budget proposal is loan financing which has fallen from 22 per cent since 2000 and envisaged to fall to 5 per cent in 2009.
The government had already revealed that about 0.5 per cent of the 2009 budget would be spent on debt repayments and any new financing from abroad would mostly be in form of grants and concessional loans.
Since Rwanda was granted Highly Indebted Poor Country (HIPC) status with the benefits of debt relief which have come as a result, the external debt burden has been significantly reduced.
According to the minister borrowing to finance the budget has been declining following the steady increase in tax revenues.
Loan financing decreased from 22 per cent of the budget in 2000 to 14 per cent in 2003 and is estimated to go down further to 7 per cent in 2008.
According to the Rwandan budget framework paper 2008-2010, the World Bank and United Kingdom based Department for International Development (DFID) were the biggest supporters of the 49 per cent foreign aid that was raised for the 2008 budget.
Both World Bank and DFID committed themselves with $60m while the European Commission pledged $24m to support the budget.
The reading of the budget comes just a month after government signed a Memorandum of Understanding (MoU) with the country's top donors to commit to supporting the budget.
According to the EU Ambassador to Rwanda, David Macrae, before a country's budget is supported, considerations like domestic accountability, management of the economy, mutual commitments in terms of peace, security, respect for human rights and democratic principles, are first assessed.
The highlight of Rwanda's 2008 budget estimates was a record of a 13 per cent increment in government spending.
The budget also didn't propose any tax changes for the year 2008, pending consultations on the economic implications of the country's entry into the East African Community (EAC).
Rwanda's GDP in 2008 was projected to grow to 7.1 per cent owing largely to the various initiatives being pursued in the agriculture sector.
Be the first to Write a Comment!
Copyright © 2008 The Monitor. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
