Rwanda’s trade deficit widens

Rwanda’s trade balance widened by over 20 percent in 2009 and more than tripled in the last five years, increasing aid dependency, the Ministry of Finance and Economic Planning has said.
Cargo being cleared at Magerwa: Imports into Rwanda registered a substantial rise in 2009. (File photo)
Cargo being cleared at Magerwa: Imports into Rwanda registered a substantial rise in 2009. (File photo)

Rwanda’s trade balance widened by over 20 percent in 2009 and more than tripled in the last five years, increasing aid dependency, the Ministry of Finance and Economic Planning has said.

Figures from the ministry suggest that last year imports outstripped exports as domestic demand for foreign goods increased while exports fell.

Statistics of selected products show that for the period ending December 2009, Rwanda generated $140.1 million from coffee, tea and minerals, down from $182.7 million in 2008. Imports increased by 8.2 percent and 17 percent in value and volume terms respectively, mainly driven by huge expenditures on consumer goods, as well as fuel and energy.

“Trade balance widened because exports did not perform well due to the credit crunch. Commodity prices fell and yet we continued to import,” John Rwangombwa, the Minister of Finance and Economic Planning said yesterday.

The ministry said that the projected decline in import value did not occur although the rate of increase in import value is the smallest in five years.

Imported goods in all categories were expected to decline in value and volume by an average of around 20 percent due to the anticipated fall in import prices and a modest rise in volume. 

Import growth was high in the beginning of the year, but showed a negative trend in the 3rd and 4th quarters of the year.

The largest revenue declines for exports were significant particularly in the mining sector which dropped by 39.8 percent from $90.7 million in 2008 to $54.6 million last year.

But the sector maintained its position as Rwanda’s top revenue export earner.

Revenue from the country’s traditional export, coffee, slid -20.8 percent as tea showed a modest rise of 7 percent.

However, the ministry said that the capital account balance, which reflects the movement of funds for investments and loans into and outside the country, increased as a result of a rise in direct investments, particularly from Rwandatel and Tigo.

“Other bowings include that of $18 million by Development Bank of Rwanda (BRD), $13 million for RwandAir and smaller amounts for Serena and for coffee exporters,” a statement from the ministry reads in part.

Receipts from the Diaspora increased modestly as revenues for charities and churches declined by over 20 percent. 

The ministry says that government aims at export promotion and import substitution through the support of Small and Medium Enterprises (SMEs).

“To bridge the gap we are trying to improve on our export sector,” Rwangombwa said.

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