The Ministry of Finance and Economic Planning has set up a team of economic experts to closely monitor the implementation of the 2014/2015 fiscal year budget, finance minister Amb. Claver Gatete has said.
“The the team will be tasked to monitor the domestic economic situation as well as that on the global arena, including climate change and regional conflicts,” Gatete said during a post-budget meeting in Kigali on Friday.
Though he did not reveal much about the team, Gatete said global economic crises, climate change and regional conflicts are big challenges to the country’s economic growth and “need to be watched closely” to ensure they don’t disrupt government’s programmes. Rwanda’s economy is projected to grow by 6 per cent this year, and inch up slightly to 6.7 per cent in 2015.
However, changes in weather patterns occasioned by global warming could affect agro-productivity, while global financial challenges do not auger well for the export industry which is projected to grow at 28 per cent by 2018.
“The financial situation in Europe and other external factors could impact on the economic growth, especially the export sector because the European Union is the main buyer of our coffee and tea,” he said.
Gatete, however, noted that government would promote irrigation, domestic resource mobilisation and strengthen the capital markets to reduce the effect of these threats in case they arise. How the Rwf1.75 trillion 2014/ 2015 fiscal year budget translates into the desired growth will require a lot of commitment from all stakeholders, he added.
Meanwhile, experts have said it is important to contain the country’s inflation rate to attract more investments and spur economic growth during the 2014/15 fiscal year. Rwanda’s annual inflation rate eased to 1.9 per cent last month, down from 2.7 per cent in April 2014. This, according to experts, could affect demand and investments if not contained.
Dr Thomas Kigabo, a chief economist at the central bank, said inflation rate has been contained at an average of 3.6 per cent in the last five months, creating confidence among investors.
“Inflation can be a threat to growth when it is in negatives and above 9 per cent. For the case of Rwanda, we have managed to keep it below 5 per cent, creating a stable investment climate,” Kigabo said in a telephone interview.
Over Rwf1.08 trillion of the Rwf1.75 trillion 2014/15 budget estimates will be raised domestically and external resources are projected at Rwf667.9b.