Rwangombwa to present budget today
Finance Minister John Rwangombwa’s budget speech today will try to convince the country that the Government can reduce donor dependence while keeping the economy on track.
Government spending in the next fiscal year, which begins in July, is set to rise by Rwf184.4 billion to over Rwf1.3 trillion as treasury scales up spending on infrastructure to boost private sector growth, a policy priority in the country’s vision 2020.
The 2012/13 budget will reflect a significant decrease in government’s dependence on donor aid.
The budget’s external financing is set to drop to 46 percent compared to 85 percent in 2000.
While the government remains determined to progressively trim the level of aid dependency, the country expects to receive Rwf 297 billion from development partners in the next fiscal year in form of budgetary support compared to Rwf 279 billion this year.
“While we appreciate all the indispensable help we received from each of our development partners over the last 18 years, we have always focused on using each development project to address current concerns and create a concrete change so that future generations would not be dependent on aid,” Rwangombwa said ahead of the today’s budget reading.
He will, this afternoon, lay out Rwanda’s current economic situation before lawmakers of both chambers of parliament and present forecasts in the budget, which runs from next month through June 2013
All budgets of East African Community (EAC) member countries will be read on the same day.
Rwangombwa will highlight how the 2012/2013 budget would enhance growth and poverty reduction strategies.
“To encourage the investment that will create more employment for our people…we need to remove the physical infrastructure bottlenecks that exist,” he said, underscoring that investment in infrastructure will remain a top priority.
Spending on infrastructure is expected to account for 23 percent of the entire budget compared to 21 percent in 2011/2012.
Human development and social cluster takes the largest share of 32.7 percent. It covers education, health, social protection, recreation, culture and religion.
“We need to have our entire population connected to steady supply of electricity, good roads and access to clean water and high speed internet, among others. This will accelerate the progress that has seen one million Rwandans pull themselves out of poverty in the last five years,” the Minister said.
The budget will also cater for the construction and rehabilitation of over 460 kilometres of roads, adding 30MW to the national grid, and scaling up investment projects in local governments to Rwf79 billion, compared to Rwf25 billion in the previous year.
It comes amidst a warning from the World Bank that developing nations should brace themselves for weak growth and “tougher times”.
There may be “a long period of volatility in the global economy” as the Euro-Zone debt crisis escalates.
The World Bank forecasts that developing economies will grow by 5.3 percent this year, down from 6.1 percent in 2011.
“Developing countries should focus on productivity-enhancing reforms and infrastructure investment instead of reacting to day-to-day changes in the international environment,” the Director of Development Prospects at The World Bank, Hans Timmer, warned on Tuesday.
However, the Rwandan economy is expected to remain robust this year with a real GDP growth rate of 7.7 percent, down from 8.6 percent last year.