2009 mini budget: Govt spends more on human development

Unlike the previous budgets, a large amount of next year’s mini budget has been allocated to funding the four priority sectors of the Economic Development Poverty Reduction Strategy (EDPRS).

Unlike the previous budgets, a large amount of next year’s mini budget has been allocated to funding the four priority sectors of the Economic Development Poverty Reduction Strategy (EDPRS).

These include governance and sovereignty, human development and social sectors, infrastructure and productive capacities.

They are seen as crucial if government is to achieve its roadmap to an economy where most Rwandans will have USD 900 to spend annually from the current less than USD 300.

The budget was presented to parliament, Thursday last week by James Musoni, the Minister of Finance and Economic Planning.

Health, education, social protection and youth and culture were allocated Rwf 121.3b which represents 0.32 percent of the total budget.

On education, government plans to strengthen technical and vocational education training colleges to overcome the skills gap while in the health sub sector, emphasis will be put on increasing access and affordability of medical services.

The mini budget also allocated Rwf136.7b to governance and sovereignty, this is 0.36 percent of the mini budget.

The money will be spent on promoting community policing, support to functioning of government institutions.

According to the minister, part of the money is for strengthening fiscal decentralisation policy by increasing transfers to districts.

Productive capacities, including agriculture, manufacturing, trade, mining and financial services were given Rwf 31.1m. This is 0.08 percent.

Government wants to increase agricultural productivity to alleviate poverty and prevent rising food prices.

The money will also help in promoting the production of export crops such as coffee, tea and horticulture.

This time the infrastructure budget amounts to Rwf 89.1b, 0.24 percent. The money will help in expanding the road network, energy distribution, ICT and water and sanitation.

Musoni also said that the annual inflation is estimated at 12 percent at the end of the year from 9.1 percent last year.

Currently Rwanda’s monthly inflation is estimated at 20 percent but the minister anticipates that it is likely to decrease to 5 percent in the medium term.

The minister attributes the high inflation on oil prices on the international market thereby putting pressure on domestic prices especially on food stuff.

He, however, said that the falling trend of petroleum products that has recently been witnessed on the international market will have a positive impact on the domestic market prices.

Government still projects real Gross Domestic Product (GDP) at 8.5 percent in 2008, compared to last year’s 7.9 percent .

The projected real GDP growth is expected to grow on medium term average by about 7.8 percent in five years from 2009 to 2012 due to an overwhelming performance in the agricultural sector which grew by 14 percent.

Financial crisis
The mini budget which comes amid the global financial crisis, is said to have been prepared putting into consideration the possible impact of the global financial meltdown and increasingly volatile international economy.

Musoni is optimistic that foreign inflows in form of donations won’t reduce as has been speculated by many economists.

Domestic resources will fund the biggest percentage of the budget contributing Rwf 197 b above Rwf 181.3 b expected from external resources. 

Musoni was also hopeful that international organisations like the World Bank would continue to fund part of the Rwanda‘s budget as it has been.