50 per cent of budget goes to growth plan

Finance minister Gatete (L)chats with Bernard Makuza, the Senate Vice president in charge of political affairs, before the session.

Government will spend 50 per cent of the planned Rwf1.6 trillion in the 2013/2014 fiscal year on strengthening drivers of economic transformation set out in the second Economic Development and Poverty Reduction Strategy (EDPRS II).

The Minister for Finance Amb. Claver Gatete disclosed this while presenting the Budget Framework to a joint session of Members of Parliament (Deputies and Senators) on Tuesday.

Amb. Gatete, told lawmakers that government plans to invest Rwf 818 billion in areas of economic transformation, rural development, productivity and youth employment, as well as accountable governance.

The government has identified the areas as the main pillars of EDPRS II, which seeks to fast-track the country’s progress towards attaining middle-income status by the year 2020.

“If we believe that this (EDPRS II) is a programme that is going to contribute significantly to Vision 2020 then we must show it by making sure that we make money available for this programme. That’s why it has taken 50 per cent of the entire national budget for the fiscal year 2013/2014,” Amb. Gatete said in an exclusive interview with The New Times shortly after addressing parliament.

In line with the plan, the government will significantly invest in infrastructure and energy projects. These range from the electrification and construction of feeder roads and model towns in rural areas to improving RwandAir fleet and empowering Rwandans in the private sector with enough skills to manufacture more goods and provide more services for exports, while building a more accountable government system.

“This is a government commitment; it’s the government way of telling ordinary Rwandans that it means what it says. In other words, if it approves a programme, it has to make sure that the money is available,” Amb. Gatete said, emphasising that the country needs to scale up investment in infrastructure if “we need to grow”.

Last month, the country’s top leaders resolved to focus attention in the next five years to improving the country’s energy sector, transport services, urbanisation, and vocational training.

EDPRS II aims at achieving 11.5 per cent annual economic growth over the next five years. The country’s GDP per capita is projected to increase from the current $644 to $1,240 by the year 2020.

Parliamentarians urge self-reliance

If plans laid out in the budget framework are approved, the Government expenditure will rise to Rwf1.6 trillion in the 2013/2014 fiscal year, up from about Rwf1.4 trillion this fiscal year.

The government has stated that the main objective of the next budget in the face of declining aid is to increase domestic tax revenue collections by an average of 0.2 per cent of GDP and limit new domestic debt to 0.6 percentage of GDP.  In the next fiscal year, the government hopes to collect Rwf 816.6 billion (15.25 per cent of GDP) in tax revenues and Rwf 67.5 billion (1.3 per cent of GDP) in non tax revenues.

While many of the lawmakers during Tuesday’s session commended the government’s poverty reduction plans, they also urged the finance minister to clearly explain how Rwandans will become self-reliant while they continue to import more than they export, only a small number of them pay the country’s taxes, and graduates of government-funded vocational training centres bristle under limited access to financing.

In response, the minister said the government plans to broaden the tax base by tapping into the potential of the informal sector as well as boosting the ability of citizens to produce more goods and services for export.

The parliamentarians have a few days to submit their comments on the budget framework before the government can produce its final budget bill for the fiscal year 2013/2014, which will be brought back to the legislative house next month.