Rwanda: How 2021/2022 Budget Will Be Financed

The Minister of Finance and Economic Planning Uzziel Ndagijimana on Tuesday June 22, presented before the two chambers of Parliament the 2021/22 budget worth an estimated Rwf3.8 trillion, a Rwf342 billion increase compared to the 2020/2021 budget.

Ordinarily, the Rwandan budget is financed from three primary sources, domestic revenues, loans and grants.

In line with the country's ambition of self-financing, domestic financing is expected to raise 67 per cent of the national budget, an equivalent of Rwf2.5 trillion.

A total of about Rwf1.26 trillion will come from external sources Rwf612.2 billion from grants and Rwf651.5 billion from external loans.

Domestic resources include tax and non-tax avenues with the former contributing the lion's share and is projected to grow compared to Rwf1.5 trillion in comparison with the revised budget.

The increase in the tax revenue collection is largely out of optimism buoyed by the gradual resumption of economic activities from Covid-19 pandemic.

Beyond taxes, the government is also expecting to earn from non-tax revenue collections which will rake in over Rwf270 billion in comparison to about of Rwf204 billion in the fiscal year 2020/21.

Among the drivers of the projections include reimbursements from the United Nations for the cost of peacekeeping operations which will bring in over Rwf177 billion.

Government also earns from various administrative fees and charges such as passport issuance and driving license fees among others.

Government agencies including the Rwanda National Police and the Rwanda Development Board, Rwanda Revenue Authority, Rwanda Mines, Petroleum and Gas Board, the Rwanda Correctional Service and Rwanda Food and drug Authority also generate revenue estimated at over Rwf34 billion.

The institutions will be allowed to spend these collections and will be added to their allocations in the budget. Rwanda will also benefit from 8.9 billion IMF debt relief for the 2021/22 fiscal year.

With regard to loans, Rwf651.5 billion is a drop in comparison to Rwf766.5 billion projected in the revised fiscal year 2020/21.

Budgetary loans will make up Rwf248.0 billion compared to Rwf457.2 billion in the current revised budget.

Key sources include the World Bank, the African Development Bank, "Agence Français de Development" (AFD) and JICA. The projected draw-down amount from the World Bank in the fiscal year 2021/22 is estimated at Rwf113.9 billion and Rwf31.1 billion from the African Development Bank Group.

The rest of the loans are project loans that will go into the Economic Recovery Program as well as the implementation of initiatives in the education sector, energy and road sectors.

For grants, Rwf612.2 billion has been projected for the coming fiscal year with a significant portion going into the vaccination rollout program supported by some donors including the World Bank and COVAX initiative funds. Grants that go into the treasury are estimated at Rwf274 billion.

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