Rwanda Targets Domestic Resources to Fund 66% of Budget

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Rwanda plans to reduce to 17 percent its current dependence on donor money as the East African country wants domestic resources to finance 66 percent of the 2017-2018 national budget.

According to the Budget Framework Paper (BPF) 2017/2018 domestic revenue is to contribute 66% to the whole budget plus 17% of loans, making the total of 83% of the entire budget. The remaining 17% will come from foreign aid.

The 2017/2018 a draft budget shows a significant rise from Rwf 1954.2 billion in 2016/2017 to Rwf 2094.9 billion.

Minister Gatete said in his recent presentation to the parliament that the recurrent budget take Rwf 1122.9 billion while development budget activities will take Rwf 774 billion.

BPF states that a total of Rwf 159.1 billion will be allocated to public investment like construction of Bugesera international Airport and expanding RwandaAir activities among others.

According to Amb. Claver Gatete, the finance minister this is because the growing private investments in the country mean that more money is being collected in tax revenues.

Available data shows that the Rwandan economy is projected to grow by 6.2 percent in 2017 and 6.8 percent in 2018, from 5.9 percent in 2016 supported by improvement in the agriculture sector with a growth rate at 4.6 percent in 2017 and 4.6 percent in 2018 due to food crops and exports crops improvement reflecting ongoing investments.

Foreign direct investment is projected to continue to increase reaching USD 307.2 million, USD 404.4 million and USD 439 million respectively in 2017, 2018 and 2019, from USD 258.9 million in 2016. In both 2018 and 2019, USD 67 million are expected as foreign direct investment and USD 81.8 million as external loans to finance imports for the Bugesera airport.

In the light of the above projections, BNR is expected to draw down 109.5 million USD of its reserves in 2017.

However, there are glaring challenges as for 2017, the rising global fuel and food prices as well as the lower than expected domestic food crops harvest poses significant threat to inflation.

This is therefore projected to increase in 2017 to about 7 percent reflecting mainly the first round pass-through effect of rising fuel and food prices as agriculture season A 2017 production was not good as expected.

 

 

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