KIMIHURURA - The government is on the right track in its current budget envelope, Dmitry Gershenson, International Monetary Fund (IMF) resident representative, said yesterday.
Gershenson is particularly impressed by the emphasis on fiscal consolidation – the creation of strategies aimed at minimizing deficits while also curtailing the accumulation of debt.
The IMF official made the remarks after the Minister of Finance; John Rwangombwa, presented the national budget for the fiscal year 2011/12, to parliament.
“I think it is an appropriate budget – it involves the basis for the government’s programmes with the IMF Policy Support Instrument (PSI) which now goes to the second year,” Gershenson told The New Times outside the Parliament buildings.
“The main feature of the budget now is the fiscal consolidation, compared to the previous fiscal year 2010/2011 [which was an expansionary budget]. Last year, the deficit, including grants, was about four percent of GDP because the country needed to deal with the impact of the global financial crisis.”
The current budget increased to Rwf. 1.12 trillion up from 984 billion, last year.
He added that: “Domestic financing, ideally, should be very small or even negative. So, from our side, the government is on the right track”.
Rwangombwa said that the government’s medium term macroeconomic framework as agreed with the IMF, and shared with development partners, aims at achieving the real GDP growth of between 7 and 8 percent, per year.
He added that the Government will stick on consolidating macroeconomic stability by continuing fiscal consolidation and domestic revenue mobilization to reduce the fiscal deficit and aid dependency.
Rwangombwa announced a number of revenue measures that will be undertaken during the financial year 2011/12 both at the regional level to promote trade but also at the national level contain inflation and maintain price stability.
Measures to be implemented include reducing fuel taxes by Rwf 100 per liter for both petrol and gasoil for fiscal year 2011/2012 to contain inflationary pressures.
The IMF oversees the global financial system by following the macroeconomic policies of member countries as it aims to stabilize international exchange rates and facilitate development.