The government proposed budget for the Financial Year 2015/16 will be Rwf1,768.3 billion, reflecting an increase of Rwf5.9 billion compared to Rwf1,762.4 billion for the current Budget.
The Minister for Finance and Economic Planning, Amb. Claver Gatete, read the highlights, yesterday, in Parliament while presenting the Budget Framework Paper and Medium Term Budget Estimates for the next three financial years.
Budget Framework Paper is a document outlining government economic policies and medium-term projections that help lay the foundations of the next financial year budget.
Minister Gatete told a joint session of Members of Parliament (MPs) and Senators that the country’s next budget will depend more on domestic revenues (67 per cent of the total budget), while foreign revenues will constitute 33 per cent of the total budget (down from about 38 per cent), including 20 per cent of the budget in foreign aid while foreign lending to the government will constitute 13 per cent of the total budget.
In the Budget for the next financial year 2015/16, total domestic revenue collections are estimated at Rwf 1,038.1 billion, of which Rwf938.6 billion is expected to come from tax revenue while Rwf99.5 billion will accrue from non-tax revenue.
Total grants in the next budget are projected at Rwf358.4 billion against Rwf417.1 billion in the current financial year 2014/15, which is a reduction of Rwf58.8 billion.
While grants to the next budget have reduced, its loans have increased, with total loans being projected at Rwf233.2 billion, which is Rwf20.6 billion higher than the Rwf212.6 billion in loans for the revised 2014/15 budget.
Gatete said in the 2015/16 financial year the government wants to implement aggressive reforms to address the vulnerability of agriculture production, to ensure fast implementation of both private and public projects in the industrial sector and promote the thriving services sector.
“The reforms will entail addressing energy supply constraints, prioritisation of infrastructure towards productive uses, implementing a private sector led approach to exports and intensifying efforts to increase agriculture productivity,” Gatete said.
Medium term fiscal strategy
A Ministry of Finance’s statement indicated that the Financial Year 2015/16 is the third year of the second Economic Development and Poverty Reduction Strategy (EDPRS2) implementation and is expected to consolidate on economic performance of 2014.
While the economy grew by 7 percent in 2014, well above 2013 growth of 4.7 percent, the government has projected the economy to grow by 6.5 per cent in both 2015 and 2016.
The economic growth in the next fiscal year will be mainly sustained by the growth of agriculture expected at 5.2 percent, industry at 8.4 per cent, and services at 7.2 per cent.
Inflation is projected to remain low and not exceed 3.5 per cent by the end of 2015, while it is expected to be contained at 5 per cent in the medium term.
Exports in 2015 are projected to grow in value terms by 6 per cent, rising from $723.1 million in 2014 to $764.4 million in 2015.
Imports in value terms are projected to increase by 7 per cent in 2015 and decline by 2 per cent in 2016.
Officials said that capital and intermediate goods imports will contribute a large share in 2015 for the implementation of delayed government infrastructure projects and will impact negatively on the trade balance deficit, as well as current account balance.
The ministry further said that increased revenue mobilisation and expenditure prioritisation remain the key objective of the government in the medium term to reduce reliance on donor funds.
Lawmakers have about two weeks to make their comments on the Budget Framework Paper and Medium-Term Budget Estimates for the next three financial years, from 2015/2016 through 2017/2018.
Some lawmakers expressed their immediate feelings yesterday, with comments ranging from ideas on what the government should do to create employment for the youth, increase the country’s export base, and generate revenues from government-owned projects and companies.
They also expressed satisfaction with the trend of reducing the country’s reliance on foreign aid, plans to develop the rural sector, and the development of the services sector in the country.
The MPs’ remarks will be considered in preparing the final Budget Proposal for the 2015/2016, which government will table before Parliament in June.