2018/19 budget to focus on domestic production

The national budget for the next fiscal year has put more emphasis on supporting local industries to produce more and empowering young people to create jobs.

Valued at slightly over Rwf2.4 trillion, the budget proposal was tabled in Parliament yesterday by the Minister for Finance and Economic Planning, Dr Uzziel Ndagijimana.

 Just like the rest of East African Community Partner States, it was prepared under the theme of “Industrialisation for Job Creation and Shared Prosperity”, to emphasise the government’s will to invest in supporting local industries to boost their production and empower young people with job creation skills.

Notably, the budget will be domestically funded at the tune of 84 percent as the Government expects to finance 68 per cent of the 2018-19 budget through domestic resources, 16 per cent through loans and expects 16 per cent to come from grants.

Dr Ndagijimana said that the budget for the next fiscal year is an improvement from previous years in the sense that it has both been increased in comparison to the current year’s budget, features more domestic funding and will benefit from planned efficiency in tax collection.

“What I can say is that the next budget will be up 16 percent in comparison to the current year. It’s a good step from one fiscal year to another. When you look inside the budget, you realise that domestically generated funds will increase about 13 percent while money collected from domestic taxes will also be up 13 percent which is a good measure too,” he said in an interview after tabling the budget.

The minister said that the country is on track with achieving its target of becoming self-reliant as it reaches only 16 percent of foreign aid money in its budget for the next fiscal year.

“In the previous years we used to have 80 or 70 per cent in external grants and it’s been going down to 16 per cent today, so we are on the right track,” he said.

In line with the self-reliance policy, the government has planned to increase efficiency in tax collection using technology like advanced electronic billing machines and expanding the tax bracket to include taxation on different properties while local production of goods and services will be encouraged.

Even as the government plans on funding the country’s next budget with 84 percent of the funds generated by Rwandans through their taxes and loans, import tariffs on goods that help boost local production in strategic sectors such as garments will be zero-rated.

“All imports to production of textile is at zero tariff which means that it’s cheaper to import any raw materials, any machinery, or any inputs to production and some producers have started,” Ndagijimana said.

Out of the Rwf2.4 trillion that the government has planned to spend in the next fiscal year, recurrent expenditure (money used to run government’s day-to-day activities) will be Rwf 1,226.1 billion while the development budget (funds to be invested in development projects) is estimated at Rwf936.6 billion.

Funds in the development budget will mainly go into boosting the government’s youth employment programmes where it is planned that 216,000 off-farm jobs will be created as the youth learning new skills will be given tool-kit packages upon graduation while their internships will also be funded.

The government also wants to invest in building roads, increasing irrigation projects, building new and repairing key electricity transmission lines, improve water supply in both rural and urban areas, and build hospitals and classrooms among other priorities.

Net lending (money that the government invests in its own income generating projects)  is set to increase by Rwf12.1 billion from Rwf178 billion in the 2017/18 revised budget to Rwf190 billion in 2018/19 budget.

The money for net lending will go into building new Bugesera Airport, expanding Rwandair fleet, and making the newly formed Air Transport Ltd Company fully operational.

Overall, the government has planned that spending of the total budget for the next fiscal year will go into funding three pillars for the country’s life, with the economic pillar taking the lion’s share of 57 per cent of the budget, social welfare claiming 27 percent, while good governance takes 16 per cent

On the economic pillar front, the government has planned that funds will be used to create new jobs for mostly the youth and women, boost TVET training through industrial attachment, help SMEs access financing, and help small factories establish themselves in industrial parks among other projects.

Projects like improving transport, scaling up access to electricity, and increasing agriculture and livestock production are also part of the economic pillar.

On the social welfare front, the government has planned to continue social protection programmes such as One-cow-per-poor-family (Girinka), VUP, supporting genocide survivors and ex-combatants, as well as building rehab centres.

Relocating people living in high risk zones, recruiting doctors and building hospitals, buying health insurance for the poor, fighting child malnutrition, and building school classrooms and labs will also benefit from funding for social welfare.

Under the good governance pillar, actions to be undertaken include civic education activities, increasing cars for police fire-brigade, supporting Abunzi mediators, and promoting IT in the justice sector among others.

Yesterday’s budget presentation in Parliament paved the way for the House’s final discussions on the budget bill, which will first be held at the level of the Parliamentary Committee on National Budget and Patrimony in the next few days, before parliamentarians can finally pass the budget bill into law.




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