What the Budget really means

People make the mistake of presuming the Budget to be classified information for the eyes of government officials only. The Ministry of Finance is in fact asking us to take more interest in the Budget and the ministry’s commentary on the 2008 Budget makes for happy reading. This year’s Budget (Frw607.5 billion) is 15 per cent greater than last year’s; less money is being borrowed, smaller amounts are allocated to recurrent spending while more is to be spent on development. Perhaps most welcome is the news that the domestic revenue component of the Budget has overtaken the external grants component.

People make the mistake of presuming the Budget to be classified information for the eyes of government officials only. The Ministry of Finance is in fact asking us to take more interest in the Budget and the ministry’s commentary on the 2008 Budget makes for happy reading. This year’s Budget (Frw607.5 billion) is 15 per cent greater than last year’s; less money is being borrowed, smaller amounts are allocated to recurrent spending while more is to be spent on development. Perhaps most welcome is the news that the domestic revenue component of the Budget has overtaken the external grants component.

External assistance has funded 60 per cent of total public expenditures on average over the last three years. This trend appears to have changed.

While donors, in recognition of the Government’s successes, have also upped their support, Rwanda is now financing a whopping Frw325.5 billion of its own budget.

The increase is predominantly thanks to a wider tax base. Tax revenues have increased from Frw74 billion in 2000 to Frw111 billion in 2003 to an estimated Frw263 billion in 2008. The increase is remarkable.

However, with the target of donor support making up only 11 per cent of the budget by 2012, the challenges that lie ahead are obviously immense.

The key to meeting such targets lies in Rwanda’s capacity to tax its people. And by people I do not simply mean businesspeople.

Instead Rwanda needs to be taxing the majority, if not all, of its population. It is impossible to tax people without money. And for people to have money they need jobs.

Rwanda’s strategy for long-term growth is predicated on ambitious targets in ICT, an area in which the country had no expertise whatsoever prior to 2000.

Technological progress relies on capacity, which takes us a step back to education. It is thus welcome news that education remains a Government priority.

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