Rwanda: Government Increases Public Spending By Rwf140 Billion

(file photo).
25 February 2020

Parliament has approved the revised national budget of Rwf3.0171 trillion for the 2019/2020 fiscal year.

The change represents an increase of Rwf140.1 billion or slightly over 4.8 per cent from the original Rwf2.8769 trillion budget.

While presenting to Parliament the draft 2019-2020 revised budget, the Minister for Finance and Economic Planning, Uzziel Ndagijimana, told Parliament that the budget review was informed by the economic and budget performance for the first six months of 2019/20 fiscal year.

He said that domestic funds are projected to increase from Rwf1,726.2 billion to Rwf1,801.9 billion, which an increase of Rwf75.7 billion.

The money, the minister said, is projected to come from tax revenues that are expected to rise thanks to the robust economic growth.

More spending on public sector salaries

Ndagijimana told lawmakers that the adjustment in the national spending is intended to cater for salaries for newly recruited health staff and promotion of medical staff, operationalization of the newly established embassies, community health-based insurance subsidies, and milk support programme under the National Early Childhood Development Program.

Rwanda’s new embassies include the ones in in Accra, Ghana; Rabat in Morocco, and Doha in Qatar.

The revised spending also aims to finance new government institutions such as the new Ministry of Internal Security and the Rwanda Water Resources Board.

The budget increment also reflects more public financing for planned sports activities including preparations for African Nations Championship (CHAN) as well as the Basketball Africa League (BAL) 2020.

The development budget is set to receive an extra Rwf13 billion

“I wonder what is behind the high rise of recurrent expenditure compared to the development budget which is invested in income-generating activities,” MP Veneranda Nyirahirwa questioned, adding that; “Won’t it continue to widen the already high trade deficit?”

Ndagijimana said that increasing financing to the recurrent budget doesn’t mean that the government was ignoring development projects.

“The institutions such as embassies that the government established have to function.  And, they play a critical role in attracting development projects for us,” he said.

MP Theogene Munyangeyo said that there was need to increase funding for the education sector by building more classrooms in order to decongest the schools.

“It is not understandable how funding for secondary and primary schools accounts for 37 per cent of the funding allocated to higher learning institutions, yet the former are the foundation of education,” he said.

Ndagijimana said that at least Rwf12.5 billion in the revised budget will be spent on the construction of new classrooms in both primary and secondary schools.

Volatility in the global commodities market

On the issue of trade deficit, Ndagijimana said, the country was grappling with the declining prices at international market, noting that prices for minerals, coffee, and tea went down by up to over 20 per cent.

“If such prices had not went down, the trade deficit would have narrowed satisfactorily because the volumes of our exports increased by 44.8 per recent, yet the revenues increased by 7.4 percent,” he said.

The minister cited increasing production of goods and services locally, increasing exports both in terms of volumes and revenues through developing horticulture crops that do not depend on prices set and controlled at international markets as some of the strategies to deal with the volatility in the global market.

“We are putting efforts in new crops such as fruits, vegetables and flowers which are somehow independent and are not much affected at [international] markets,” he said, observing that they can supplement ordinary export commodities such as coffee and tea.

He added that under the Made-in-Rwanda programme, the country is engaged in producing more items domestically which can substitute some imports.

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