7 March 2014

Rwanda: Budget Revised Up By Rwf24 Billion

The government has revised its 2013/2014 Financial Year National Budget upward by Rwf24.2 billion, citing major changes in the projected fund basket, as well as the need to cushion against economic uncertainties.

The new figures, approved by Parliament yesterday, depict an increase from the original budget of Rwf1.653 trillion to Rwf1.677 trillion.

"Several things have changed that we had not planned, for example, in regards to Budget support grants, government had taken a conservative stance in the 2013/14 Budget due to the suspension and cancellation of aid by some development partners," Amb. Claver Gatete, the minister for Finance, said yesterday after presenting the revised Budget before the lawmakers.

"However, improved relations have led most donors to resume aid flow to the country, while others have increased their original contributions."

Figures from the ministry show that improved relations with donors attracted more grants, from Rwf170 billion to Rwf201 billion.

While addressing Parliament, Minister Gatete said the revised Budget will also be bolstered through funds received from RwandAir, in repayment for a loan which the national carrier had borrowed from government to clear a longstanding debt.

"The government lent RwandAir $200 million (about Rwf 135 billion) to finance its debt; and they repaid it back, so we will inject it directly into the budget," Amb. Gatete said.

"On top of that, peacekeeping operations brought in extra money from UN, while we have also seen an increase in taxes and non-tax revenues."

These fund injections are expected to come as relief to the government which had projected an overall cash deficit of Rwf125 billion between July and December 2013.

"The cash deficit was to be financed with external loans of Rwf54.7 billion and domestic finance of Rwf70.7 billion. In the case of domestic finance, the largest share of this amount was to come from unused Euro Bond receipts to fund expenditures at the Kigali Conference Centre and EWSA's hydro projects," the minister said.

MPs react

Although the revised Budget received approval from MPs, with only one abstaining, some expressed concern over government's reliance on donor funds.

"Many projects suffered delays because donors suspended their aid; we have learnt that we cannot always depend on others, so we must look into more investment ventures that can fill that gap. We need more investment projects that will make money for the government, rather than having hope in aid which can be cut and reinstated," MP Jean Thierry Karemera said.

MP Julienne Uwacu, the deputy chairperson of the Standing Committee on Foreign Affairs, Cooperation and Security, said in order to justify the Budget increase to citizens, government must ensure that the major promises made to the public are fulfilled.

"Sometimes development is delayed because projects are not implemented in time. Even when money is available, some projects are delayed, so you find that the citizens do not benefit," she added.

Drawing examples, the MP said residents of Ngororero were promised a road, whose construction began but was not completed.

"These unfinished projects displease citizens," Uwacu said.

Economic competitiveness is the way forward, according to MP Juliana Kantengwa, who said productivity of small and medium enterprises is crucial in finding alternatives to donor funding.

"The competitiveness of small and medium enterprises in Rwanda is very low compared to our East African partners. They are the weakest link in our drive to development and if we want to increase productivity and domestic funding for our Budget, we should devise means to propel the SMEs sector," MP Kantengwa said.

Breaking down the new budget

Tax revenue is expected to increase from Rwf776 billion projected in June 2014 to Rwf782.4 billion. According to government sources, the increase is likely to come from Pay As You Earn receipts due to expected increase of hiring of additional public servants in this fiscal year.

Rwanda's peacekeeping missions are also paying off monetarily. Total non-tax revenue was revised upwards to Rwf123.8 billion from Rwf68 billion, mainly supported by peace keeping mission reimbursements which increased from Rwf67.5 billion to Rwf87 billion.

The government is also set to lift a ban on recruitment of public servants, which had been halted due to aid suspension, thus expenditure on salaries is set to increase from Rwf181.7 billion to Rwf195.2 billion.

Additionally, the Budget will receive an extra Rwf3.5 billion-in form of unused funds that had been earmarked for the completion of Kigali Conventional Centre.

Rwanda's solidarity fund, Agaciro Development Fund, has bulged in two years since its inception, to excesses of Rwf23 billion, and, according to Amb. Gatete, the Fund offers government a comfortable fallback in case of deficit.

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