The Minister of Finance and Economic Planning has said that the Government proposes to increase the national budget for this fiscal year from Rwf3,245.7 billion that was approved by Parliament in June 2020 to Rwf3,464.8 billion. This represents an increase of Rwf219.1 billion or about 6.7 percent of the total budget for the fiscal year 2020/2021. Uzziel Ndagijimana disclosed this on Thursday, February 11, while presenting the mid-term budget revision to the virtual plenary of the Chamber of Deputies. The plenary sitting approved the relevance of the budget bill, and it will be scrutinised by a responsible committee prior to being voted into law. Overall, the increment has been allocated for various purposes including bridging the gap in paying salaries of health sector personnel, salaries for the recently appointed diplomats, supporting the operations of newly created institutions including National Cyber Security Authority (NCSA), and the Rwanda Space Agency (RSA). It is also expected to be used to increase funding to the Ministry of Health and the Rwanda Biomedical Centre, to finance activities intended to sustain the fight against the Covid-19 pandemic. Still, the additional financing would be used to increase allocation to the Rwanda Correctional Service (RCS) for the purchase of food to inmates, buying consumables to support practical training of students in TEVT schools and Integrated Polytechnic Regional Centres (IPRCs), as well as helping the Government to pay its debts, and increase its investments. “The budget revision process was informed by economic and budget performance for the first quarter of 2020/21 which includes assessment of Covid-19 economic effects, support to vulnerable households and businesses,” Minister Ndagijimana said. Domestic resources, he said, are expected to increase by Rwf179 billion from Rwf1,605.7 billion in the original budget to Rwf1,784.7 billion representing an 11.1 percent increase. The Minister indicated that this increment will come from all tax categories namely direct taxes, taxes on good and services and taxes on international trade as a result of economic recovery in doing business as well as improved collection of taxes. MPs concerns Tax revenues are projected to increase by Rwf158.5 billion, from Rwf1,421.4 billion in the original budget to Rwf1,579.9 billion, the Minister indicated. On the other hand, non-tax revenue is expected to increase Rwf20.5 billion upwards from Rwf184.3 billion to Rwf204.8 billion. MPs expressed concern on how the Government will be able to fund its budget, especially through collecting more taxes yet businesses, in general, have been hit by the Covid-19 pandemic. “I would like that the Minister explains how more revenues will be domestically mobilised yet many economic activities that would pay the taxes are halted due to Covid-19. I thought the projection was made before the pandemic,” said MP Odette Uwamariya. MP Christine Bakundufite wondered how expected taxes would increase by Rwf158.5 billion, yet, the Minister said that economy was shaken [by the covid-19 pandemic], and many businesspeople have reported that they incurred losses, a situation that prompted the Government to set up a fund intended to support the economic recovery of affected businesses because of the pandemic. “We would like to know how that revenue collection target is possible because we think that taxes would decrease as a result of the Covid-19 pandemic that has ravaged the entire world, Rwanda inclusive,” she said. However, the Minister assuaged the legislatures concerns, saying that the forecast took into consideration the realities of Covid-19 and its impact on businesses. “It is true that the economy suffered an adverse effect of Covid-19 pandemic. But, our projections also took that into consideration, recognising that the revenues we could generate would be less,” he said, indicating that the negative economic impact of the pandemic was higher in the early months of its outbreak. After six months of assessing the economic state and the revenue collection trend, he said, the situation was improving. “For instance, the revenue collection target from July to September [2020] was surpassed by over Rwf40 billion,” he said. In October 2020, the International Monetary Fund (IMF) mission said that given the size of external and domestic shocks caused by containment measures, Rwanda’s real gross domestic product (GDP) growth was now projected to contract to -0.2 per cent in 2020 and rebound to 5.7 per cent in 2021. Meanwhile, net lending went up by Rwf165.2 billion from Rwf306.5 billion to Rwf471.7 billion. This increase, the Minister said, will be allocated to the economic recovery fund as the continued effort of the Government to support businesses affected by Covid-19 pandemic outbreak.
