The Minister for Finance and Economic Planning, Uzziel Ndagijimana, Thursday evening presented the proposed budget for the 2019/2020 fiscal year to a joint sitting of both chambers of Parliament. The next fiscal year starts July 1, 2019 through June 30, 2020.
The Finance minister said the budget will amount to Rwf2.8 trillion, which represents an increase of Rwf290 billion from the 2018-2019 budget.
According to the Budget Framework Paper (BFP), presented to parliament in April, the Government proposes that of the Rwf2.8 trillion planned for the next fiscal year, Rwf1.7 trillion would come from domestic tax and non-tax revenues.
The Budget Framework Paper provides the basis for the preparation of the actual budget.
The Government had indicated that it had designed the budget in line with strategies for propelling Rwanda into the upper middle income status by 2035 and high income by 2050.
However, there are mixed reactions of whether the budget will activate the much-anticipated transformation given uncertainties in the global economic environment characterised by projected weak economic performance growth.
The global economy is projected to grow at just 3.3 per cent in 2019, according to the International Monetary Fund (IMF) forecast.
The economic recovery in Sub-Saharan Africa continues after the region faced a tougher external environment in 2015 -2016 in the wake of a decline in global commodities price.
Célestin Rwabukumba, the Chief Executive Officer of Rwanda Stock Exchange, told The New Times that he sees the Government generally spending its resources on key sectors that heavily influence economic activity.
He highlighted, among others, the decision by the Government to recapitalise Rwanda Development Bank (BRD) and the national carrier RwandAir, saying that this is a positive move.
“What does the decision to recapitalise RwandAir means, for instance? With 1.7 million travellers expected at the (proposed) Bugesera International Airport soon, how are you going to accommodate that? RwandAir must have capacity to carry that,” he opined.
On the other hand, he added, by investing more in BRD the Government seeks to boost economic activity because the development bank invests greatly in infrastructure, off-grid energy solutions, export promotion, and low cost housing.
“These are areas that are going to drive the economy, provide jobs for the people, as well as provide affordable and decent housing,” he noted.
The Government will, over the next three years, spend Rwf23 billion to recapitalise the BRD to increase the lender’s ability to fund the country’s ambitious development agenda.
Under the upcoming budget, the Government plans to increase funding for the national carrier from Rwf107.1 billion in the fiscal year 2018/19 to Rwf121.8 billion in 2019/2020.
Angello Musinguzi, the Tax Manager at KPMG Rwanda, said that the Government ought to do more for agriculture and education.
“These sectors directly affect the common man. 4 per cent allocation to the agriculture sector is small. Education equally needs more funding because we are in a market where quality of labour is very critical,” he noted.
In the proposed budget, government is expected to spend a total of Rwf127.8 billion on agriculture, which represents about 4.4 per cent of the total budget, and about Rwf310.8 billion on education sector.
Key interventions under the budget for next fiscal year will include growing traditional exports, promoting non-traditional exports, and growth of the services sector.
The Government wants to dedicate a portion of the envelope to the promotion of import substitution and diversification of exports with the aim of reducing exposure to external shocks and trade imbalances over the next three years.
Similarly, implementation of the Made-in-Rwanda policy will continue to play a key role in narrowing the current account deficit in the short to long-run and help consolidate private sector domestic activities, create jobs and boost economic growth, analysts say.
In the transport sector, one of the main projects is the continuation of Bugesera International Airport (BIA) construction works, which are now at 26.3 per cent progress, according to the Ministry of Infrastructure.
In order to improve and sustain quality of road network, national earth roads under upgrading to paved roads will be prioritised.
These include Ngoma - Nyanza (120km), Huye-Kibaho-Ngoma/Munini (66km), Base-Rukomo-Nyagatare (125.2km), and Base-Butaro-Kidaho (63km).
Rehabilitation works for national paved roads, including Huye-Kitabi (53km), Sonatube- Gahanga-Akagera (13.8km), and Kagitumba-Kayonza-Rusumo (208km) will also be prioritised during the upcoming fiscal year.