2016/17 budget revised upwards to Rwf1,954.2bn

The government yesterday tabled before Parliament a revised draft law for the 2016/17 fiscal year budget seeking to increase its spending by Rwf4.9 billion. This will bring the total government spending for the current financial year to Rwf1,954.2 billion, from Rwf1,949.4 billion previously. Finance minister Claver Gatete explained that the review is informed by proposed changes the government wants to undertake before the closure of this financial year. The changes include an additional Rwf3.9 billion that will be raised from domestic revenues on the back of widening tax-base driven by the growing number VAT-registered tax-payers. The tax is collected through Electronic Billing Machines (EMBs). Gatete added that the changes are also driven by the planned sale of 19.61 per cent of government stake in I&M Bank beginning February 14, as well as the need to increase expenditure on infrastructure projects; provide funding for UN peace-keeping operations; expansion of RwandAir operations, and funding of the Bugesera International Airport project. He added that the revision will help cover funding gaps left by donor support in terms of grants that were cut to Rwf49.1 billion, from Rwf94.4 billion. In general, funding from grants will be reduced by Rwf38.8 billion to Rwf326.6 billion from Rwf365.3 billion previously. “The 2016/17 revised budget is part of the revised medium-term macro-economic framework which is guided by the need to address the external shocks affecting the national economy. “It is also consistent with the long-term objective of increasing domestic revenue mobilisation, while introducing expenditure prioritisation measures to reduce the fiscal gap and the reliance on external funding,” Gatete told the lawmakers. Financial resources The review means domestic resources will increase from Rwf1,182.4 billion to Rwf1,186.3 billion . Government expects a growth in tax revenues of Rwf9.8 billion thanks to increased value added tax (VAT) collections. Total loans for the revised budget are expected to increase by Rwf7.4 billion on account of a World Bank loan for the agriculture sector and foreign exchange reserve support due to depreciation of the franc. This means an increase from Rwf367.7 billion in the original budget to Rwf375.2 billion. Spending Accordingly, the government’s recurrent budget has risen from Rwf945.7 billion to Rwf993.6 billion to cater for additional allocation on wages and salaries. Minister Gatete stated that allocation on recurrent non-wage expenses are about pre-financing of the UN Peace Keeping operations (Rwf24.5 billion), debt servicing, Rwanda Correctional Services (Rwf4.9 billion) and covering the National Electoral Commission spending shortfalls of Rwf1 billion, and financing Iwawa Rehabilitation Centre activities, among others. However, the development budget has been slashed slightly to Rwf779.9 billion from Rwf785.7 billion. The minister attributed this to the reduction in disbursements from donors, but assured Parliament the cut won’t affect implementation of planned projects. Among the expected projects in the development sector include the expansion of RwandAir as it moves to open new routes in Asia, the UK and United States of America, as well as financing Bugesera International Airport works. Already, the government seeks to finance those activities from the expected net lending of Rwf142.3 billion which would have increased from Rwf121.4 from the previous approved budget. MPs speak out Reacting on the revised budget, legislators welcomed and approved the bill instituting the revised budget. But they wanted to know the likely impact from the decline in development financial spending as well as the increase in the recurrent budget. “What impact would the decline in the development budget cause to the President’s pledges and the country’s seven-year economic development plan?” queried MP Euthalie Nyirabega. However, Gatete explained that under normal circumstances, if President promises something, the ministry immediately considers the cost of the activity and includes it in the budget, “unless the project requires a lot of time and money”. The revised budget draft law will now be sent to the national budget and patrimony standing committee for further scrutiny before it is brought back to the plenary session for approval.

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2016/17 budget revised upwards to Rwf1,954.2bn