“This budget exceeds the previous approved budget by 34 percent,” said Monique Mukaruliza, the Chairperson of the Council of Ministers.
If the proposed Community’s budget estimates for the financial year 2009/2010 are approved by East African Legislative Assembly (EALA), the Community’s parliament, the East African Community (EAC) will spend more than it did last year.
The community is expected to spend $54,257,291 up from $40,499,096 to finance the implementation of the projects and programmes of the EAC for financial year 2009/2010.
This budget exceeds the previous approved budget by 34 percent.
Presenting the budget to the EALA, the community’s parliament in Burundi recently, the chairperson of the Council of Ministers , Monique Mukaruliza, underlined that the current global economic down turn poses enormous challenges for the community in the next financial year citing a sharp decline in partner state domestic revenue.
Mukaruliza noted that this will not only affect the economic growth of the region but also the community’s revenue and expenditure for the financial year 2009/2010.
“The EAC organs and institutions will have to brace for difficult financial times ahead though it is only through intensifying regional integration that the EAC partner states will be able to ride the storm,” she said.
Most EAC partner states had estimated Gross Domestic Product (GDP) growths of above 8 percent for the fiscal year 2009/2010.
But due to global economic down turn the International Monetary Fund (IMF) puts this growth rate at the average of 5.5percent for Kenya and Uganda with Tanzania at between 4-5percent. Rwanda is estimated to grow at 5.6percent and Burundi at 4.8percent.
Mukaruliza told parliament that while the magnitude of the impact of the global crisis on EAC economies is yet to unfold, it is anticipated that there will be decline in donor support for the Community. This is because the developed world has already been hit hard by the crisis.
She also underscored the need to consolidate ongoing regional projects and programmes, specifically the Customs Union and the Common Market that will lay the foundation for Monetary Union.
Just like in the previous budget, priority has also been placed on regional infrastructure development, industrialisation, trade and investment. This will also take the lion’s share of the budget accounting for 50.6 percent of the total expenditure at $27,423,600.
“The aim is to address effectively the challenges of competitiveness posed by the current inadequate state of infrastructure in the region,” emphasised Mukaruliza who also doubles as Rwanda’s minister of EAC affairs.
More spending is intended also on promoting regional agricultural and rural development, including Lake Victoria Development Programme.
Priority has also been given to intensifying co-operation in the social sectors, intensifying co-operation in political affairs; and institutional development, including capacity building for EAC organs and institutions and re-branding of the EAC.
However, Mukaruliza observed that the EAC has also faced financial shortfalls due to generalised delayed remittances of contributions by the partner states.
Had it not been for funding from development partners, according to Mukaruliza, many EAC projects and programmes would not have been implemented.
For instance, the recurrent expenditure (18.6percent of the current budget estimates) ,which the EAC partner states are fully responsible, the Secretariat had to resort to borrowing from the Gratuity Fund and the Reserve Fund to bridge expenses related to salaries and meetings of the EALA in last financial year.
“This fact raises the concern about the increasing reliance on external funding for critical projects and programmes. Such financial over reliance on donors could affect the sustainability of the regional integration process.”