The government has unveiled a revised budget for the 2020/21 financial year in which it has allocated Rwf29.3 billion to subsidize public transport to offset the losses incurred by transport operators.
The revised budget, which was virtually presented to both chambers of parliament on February 11 by the Minister of Finance and Economic Planning Uzziel Ndagijimana seeks to tackle the Covid-19 pandemic and speed up economic recovery.
Ndagijimana said that public transport subsidies were necessary to offset the losses incurred by operators following a directive that compels buses not to exceed 50% of their passenger capacity.
The directive is part of the government’s guidelines to encourage social distancing in order to control the spread of the Covid-19 virus.
The proposed revisions to the 2020/21 budget reflect changes in the resource envelope as well as adjustments on expenditures.
As a result of the proposed changes, the total budget is projected to rise from Rwf3,245.7 billion to Rwf3,464.8 billion showing an increase of Rwf219.1 billion.
Recurrent expenditure has been raised by Rwf12.4 billion from Rwf1,583.0 billion from Rwf1,595.4 billion in order to cater for the increase in the public sector wage bill.
Capital expenditure is expected to rise by Rwf37.6 billion, from Rwf1,298.5 billion to Rwf1,336.1 billion.
Public debt is also set to increase substantially.
Net lending, the minister said, increased by Rwf165.2 billion from Rwf306.5 billion to Rwf471.7 billion, adding that this increase will be allocated to the Economic Recovery Fund.
The move is part of the efforts to support the virus hit business
"Public transport buses were ordered not to exceed 50 per cent capacity in transporting passengers yet transport fares didn’t increase. There had to be a budget to subsidize the sector so that investors do not count losses. That is why the recovery fund had to get more budget,” he said.
The minister added that in general since its establishment, at least Rwf67 billion from the recovery fund has been spent to help different businesses recover.
"It supported hotels and different businesses. It supports micro-businesses to get working capital and guaranteed. It supported banks to extend loan repayment periods among others,” he said.
Other sectors with budget increase
The increase in the recurrent expenditure is meant to close the salary gaps in the health sector, cater for salaries of new diplomats and operation of the new government agencies such as National Cyber Security Authority (NCSA) and Rwanda Space Agency (RSA).
The Ministry of Health, Rwanda Biomedical Centre has also been allocated more funding to deal with the Covid-19 pandemic.
Rwanda Correctional Services got more budget to buy meals for prisoners, the TVET sector got extra funding to buy consumables for students in workshops while more budget was allocated for paying back loans as well as increasing government investments.
In order to finance these increases, the minister said that tax revenues are projected to increase by Rwf158.5 billion, from Rwf1, 421.4 billion in the original budget to Rwf1, 579.9 billion.
Non-tax revenues are expected to increase by Rwf20.5 billion upwards from Rwf184.3 billion to Rwf204.8 billion.
Grants are expected to rise by Rwf99.7 billion, upwards from Rwf492.5 billion in the original budget to Rwf592.2 billion.