Rwanda Focus (Kigali)

14 February 2013

Rwanda: Budget Revised Due to Aid Suspensions

The Minister of Finance and Economic Planning John Rwangombwa has presented to the chamber of deputies the revised budget for the fiscal year 2012-2013. Presenting the revised budget, Rwangombwa told MPs that that budget will actually increase to Frw 1, 550 billion from the initial Frw 1,385 billion which was voted by the parliament on June 26 last year.

Minister Rwangombwa told lawmakers that though there were challenges like the global economic crisis and donors suspending aid, the country tried to stay on course and the economy continues to grow.

He said that exports increased by 24.8% compared to 14% which was targeted. The country's revenue in the first semester of this fiscal year equals to Frw 647.6 billion while only Frw 146.5 billion was targeted. So far the government expenditure equals Frw 596.8 billion, a reduction of Frw 74 billion.

"Frw 54.4 billionthat was supposed to come from donors, but which we are not sure to receive, has been removed from the 2012/2013 budget," Rwangombwa explained.

He remarked that Frw 227 billion has been added in order to pay loans contracted by the government to buy Rwandair's new aircrafts and for construction of the Kigali Convention Center. There has also been a revision and reduction in reimbursements from peacekeeping operations, which was misreported as Frw 58 billion instead of Frw 44 billion.

Rwangombwa told MPs that the estimated tax collections have been maintained at Frw 641 billion as Rwanda Revenue Authority is expected to reach the target.

"Non-wage expenditures have been cut by 40% due to austerity measures in revised budget," said Rwangombwa who added that cuts were made mainly to budget items that will not significantly affect service delivery. "Due to budget support suspension, total resources for the period experienced shortfall of Frw 156.5 billion."

Infrastructure projects (especially energy) and the agricultural projects will be protected from the budget cuts. "Different projects in the local government entities will also be protected," Rwangombwa said.

The original domestic capital spending was reduced by 7.2%, from Frw 277 billion to Frw 258.2 billion. "The implementation of some ongoing projects will be slowed and in some cases put on hold pending availability of grants," the Minister said, adding however that suspended funding from the African Development Bank and World Bank amounting to Frw 107.6 billioncould be released before end of March.

Rwangombwa said that there will be no cuts in salaries of government employees despite reduced spending on administrative costs. "What we did was delaying recruitments which made us gain Frw 9 billion."

After Rwangombwa's presentation, lawmakers commended the government measures to mitigate the aid cuts and unanimously voted the bill with 68 out of 69 parliamentarians present approving it. It was sent to the parliament's standing committee on Budget and National patrimony for further analysis.

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