Rwanda’s minister of Finance and Economic planning Ambassador Claver Gatete has presented the 2016/2017 budget worth Rwf 1,949.4 billion on Wednesday. The presentation of the budget was held at the Rwanda parliament.
Government will finance 62.4% of its budget through domestic revenues amounting to Rwf 1216.4 billion. This represents a slight increase of Rwf 40.9 billion compared to Rwf 1175.5 billion spent in 2015/16.
The remainder of the budget will be funded by external resources worth Rwf 733 billion (37.6% of total budget). This represents Rwf 99.7 billion increase compared to Rwf 633.3 billion in the 2015/16 revised budget. External resources will come from budgetary grants (Rwf 219.3 billion), project grants (Rwf 146.0 billion) and foreign borrowing (Rwf 367.7 billion).
The budget under the theme “Promoting economic development through increasing exports and promoting made in Rwanda products” increased by Rwf 140.6 billion from Rwf 1,808.8 billion in 2015/2016 fiscal year.
“Allocations in this fiscal year take into account of the priority areas we are focusing on to achieve our theme for this 2016/2017 fiscal year,” said Minister Gatete.
Expenditure allocation in the 2016/17 budget and the medium term has been made according to the second Economic Development and Poverty Reduction Strategy (EDPRS2) objectives and a large share has been allocated to the EDPRS2 sectors.
Thematic areas have been allocated Rwf 1,071.8 billion representing 55% of the total budget for 2016/17 fiscal year. Economic Transformation takes the lion’s share with Rwf 517.1 billion (27%), rural development will be allocated Rwf 256.5 billion (13%), Productivity and Youth Employment gets Rwf 106.0 billion (5%) and Accountable Governance takes Rwf 192.2 billion (10%).
The foundational Sector which comprises of health, education, justice, peace, stability, food security, macroeconomic stability and public finance management among others will be allocated Rwf 877.6 billion representing 45% of the entire budget.
The government has enacted fiscal adjustments to curb the fiscal deficit from 5.4% of GDP in fiscal year 2015/16 to 3.9% in 2016/17. Minister Gatete noted that in the 2016/17 budget, adequate resources for priority programs and projects have been catered for.
These include vital infrastructure projects that will reduce the cost of doing business, provisions for goods and services for smooth running of Government operations, as well as safeguarding social protection projects and programs to ensure a just society.
“High priority will be given to economic activities which will either increase export revenues or reduce import volumes. The identified key sectors for fostering economic activity include Textiles, garments and leather industry, agriculture export crops, agri-business, construction, livestock, wood industry, minerals, tourism and ICT and trade and investment facilitation,” Minister Gatete said.
Regarding import substitution, the Government has selected key sectors namely cement, sugar, rice and clothing where it believes local production can reduce current imports while on- going export promotion efforts will be supported by the export promotion fund.
Medium term macro-economic policy objectives
Gatete said that activities aimed at promoting export growth are allocated Rwf 55 billion, while projects for increasing agriculture productivity will receive Rwf 87.2 while projects for reducing cost of investment will take Rwf 229.7.
Under the domestic financing, tax revenues will contribute Rwf 1,071.6 billion which is 55 percent while non-tax revenues amount to Rwf 110.8 billion with domestic loans amounting to Rwf 34 billion.
“We plan to raise domestic revenues through widening the tax base, increasing tax payers using the electronic Billing Machines-EBMS and revising the tax procedure Law to ease tax compliance,” Amb Gatete noted.
While external financing to the total budget amount to Rwf 733.0 billion which increased by 99.7 billion from Rwf 633.3 billion in the 2015/2016 budget while donations amounts to Rwf 365.3 billion equivalent to 18.7 percent of the total budget with external loans totalling Rwf 367.7 billion which represents 18.9 percent.
KEY FIGURES IN 2016/17 NATIONAL BUDGET
- 62.4% of the budget will be financed through domestic revenues
- 45% will be allocated to health, education, justice, stability and food security
- 27% will be allocated to economic transformation with key focus on textiles, garments and leather industry, agriculture export crops, agri-business, construction, livestock, wood industry, minerals, tourism and ICT and trade and investment facilitation.
- 13% will be allocated to rural development
- 10% will be allocated to accountable governance
- 5% will be allocated to increasing productivity and youth Employment gets Rwf 106.0 billion (5%)