KIGALI - The Minister of Finance and Economic Planning. John Rwangombwa, today presents to parliament the government’s budget and economic policy for the financial year 2011/2012.
The theme of the 2011/12 budget is “Ensuring food security and price stability whilst maintaining sustainable growth” as the country’s budget crosses the trillion-franc mark for the first time ever.
“The global economic activity continued to strengthen during 2010 at an annual rate of about 5.25 percent. This was mainly led by emerging economies, particularly China, India and Brazil,” Rwangombwa said, ahead of the budget speech today.
He noted that the 2011/12 budget had been prepared at a time when current global economic and financial situation looks uncertain with several macroeconomic risks such as the high oil and food prices.
Rwangombwa added that even though some pockets of vulnerabilities persisted at the end of 2010, the world’s real GDP growth is forecast to be about 4.5 percent in 2011 and 2012, slightly down from the 5 percent registered in 2010.
“Our economy recovered in 2010 after a slow down in 2009 reflecting the global financial crisis. The real GDP growth was about 7.5 percent in 2010 compared to 6.1 percent in 2009,” Rwangombwa remarked.
“All economic sectors contributed to this performance, particularly, agriculture, where food crops increased as a result of the distribution of fertilisers and improved seeds,” he said.
The Finance Minister added that growth was registered in manufacturing and construction as a result of the government’s on-going investments and increase in energy and growth in services, including on-going investments in communication, finance and insurance.
Inflation rate fell from 5.9 percent in December 2009 to 0.2 percent in December 2010, the lowest in the region.
The Finance Minister said the government was monitoring the inflation rate that started to rise in 2011 before taking appropriate measures as it is expected to be highly affected by oil and food prices on global markets.
Also, major export commodities such as coffee, tea, minerals (cassiterite, wolfram and coltan) performed better, benefiting from rise in world prices.
The level of imports was lower than projected in 2010 due to delays in implementation of strategic investment projects.
The surplus of Balance of Payments helped the country to increase external reserves to US$814.2 million, enough to cover 5.4 months of imported goods and services.
At the end of April 2011, 86% of expected resources were collected against 85% of total expenditures incurred. This shows that we are on track and the 2010/11 budget will be implemented at 100 percent by the end of June 2011.
Agriculture: Focus on Food Security, Increased Production
In an interview with The New Times, Rwangombwa said that the government targets to boost productivity by spending on irrigation to stop heavy reliance on rain that is increasingly becoming unpredictable.
The draft budget paper allocates Rwf 67 billion to the agricultural sector in the next budget, up from Rwf 64 billion allocated to the sector in the 2010/11 Budget.
Rwangombwa said that the government will invest heavily in crop intensification and other areas that increase productivity such as fertilisers and high yield seeds.