East African Business Week (Kampala)
Bosco Hitimana
29 November 2008
Kigali, Rwanda — Rwanda will fully align budget calendar with other East African Community (EAC) member states with effect from July next year.
Finance and Economic Planning Minister, James Musoni, confirmed the commitment while reading the country's 2009 mini-budget that will run from January 1 to June 30, 2009.
Rwanda acceded to the East African Community (EAC) treaty on June 18, 2007 and became a full member with effect from July 1, 2007.
With full membership, Rwanda committed itself to harmonize policies and processes with other EAC member states in various areas of cooperation including the alignment of budget calendar. On July 1, 2009, Rwanda will have marked two years as a member of the EAC.
By harmonizing budget calendar to that of the EAC, Rwanda's fiscal year which all along starts January throughout December, will now change to start in July up to June.
"Rwanda has committed to fully align with the EAC by July 2009. Consequently the current budget calendar will change beginning 2009," Musoni said.
He said the first six months of 2009 will be a transitional period, preparing to fully align with the EAC.
The read 2009 mini-budget of Rwf378.3billion (US$682,522,522) will run from January 1 to June 30.
The 2009 mini budget presented to Parliament says tax revenue is expected to grow from 12% of Gross Domestic Product (GDP) in 2008 to 14% of GDP in the first six months of 2009.
The minister explained that domestic revenues (tax revenue) account for 44% of state resources compared to 41% in the revised 2008 budget.
He attributed the increase to improvements in tax administration as well as high prices for goods and services that indicated a positive impact on taxes.
On the other hand, non-tax revenue will be low at only 4% of the total state resources and includes fees and fines collected by central government.
He further stressed that sale of treasury bills will be kept as low as possible to prevent crowding out the private sector from accessing credit from financial institutions.
He explained that the mini-budget was prepared focusing on the major four government priority sectors, namely infrastructure, product capacities, human development and governance.
The government plans to increase spending on infrastructure from 0.23% of the 2008 budget share to 0.24% in the 2009 mini-budget, spending Rwf89.1billion (US$160,540,540) in just six months compared to Rwf157.8billion (US$284,324,324) spent in the whole of last year.
"This is a crucial sector for economic growth as infrastructure projects to improve road network, electricity supply and the ICT infrastructure, enhance Rwanda's competitiveness internationally and reduce bottlenecks for the private sector," Musoni explained.
Productive capacities allocation stands at Rwf31.1billion ($56,036,036) equivalent to 0.08% budget share while human development and social sectors represent Rwf121.3billion ($218.5million) equivalent to 0.32% of the budget share.
Productive capacities sector include activities such as agriculture, manufacturing, trade, mining and financial services. Governance and sovereignty will take Rwf136.7million (US246.3million) accounting for 0.36% of the total budget share. The government will spend on education, health and social protection to keep up the development pace in social sector.
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