The Government is set to receive funds from the Common Market for Eastern and Southern Africa’s (COMESA) adjustment facility that will help to bridge the shortfall in the country’s fiscal revenue.
Last month, the Ministry of Finance and Economic Planning said that state tax collections had reached Rwf189 billion as of November against the target of Rwf479 billion for the whole financial year, prompting a possible budget cut of Rwf8.5 billion early this year.
However, Elias Baingana, Director General of National Budget at the Ministry, last week revealed that the country is due to receive €12.3 million or Rwf9.453 billion by end this month, allaying fears of budget cuts.
“This covers the shortfall; we will do internal reallocations to facilitate implementation of the whole budget but the total budget remains the same,” he said without divulging further details about the planned budget review due in the first quarter of 2011.
The development follows the fourth COMESA meeting of the regional integration support mechanism advisory committee held in November in Lusaka, Zambia.
The COMESA Fund, which is currently chaired by Rwanda, has an estimated value of €70 million with the largest donor being the European Commission.
The Fund has two different windows; infrastructure and adjustment facility established to facilitate regional integration and mobilise resources for development projects in member states.
In 2009, Rwanda received €10.3 million through budget support for the FY 2009/10 as part of compensation for the country’s projected revenue loss of Rwf12.2 billion as a result of joining the EAC Customs Union.
John Rwangombwa, the Finance Minister recently said government intends to revise revenue targets in the imminent budget review.
The target was really big. We over stretched. We wanted to give ourselves this jump which was high and we increased by 4 percent; we will reduce slightly to be more ealistic.”Rwangombwa said, explaining the shortfall in tax collection.
In his budget speech for the FY2010/11 in June last year, the Minister said he anticipated total domestic revenues for the FY2010/11 to rise sharply to approximately Rwf479 billion or 13.6 percent of GDP, up from Rwf385.1 or 12.2 percent of GDP in 2009/10.