Rwanda’s Finance Minister, Claver Gatete, has just presented Rwanda’s budget to a joint plenary session of members of parliament and senators. His total budget for fiscal year 2015/16, is projected at Rwf 1,768.3 billion representing 28.8% of the GDP.
This reflects an increase of Rwf 5.9 billion compared to the 2014/15 revised budget of Rwf 1762.4 billion (31% of GDP).
His budget for 2014/2015 was Rwf 1.75 trillion, an increase of Rwf 75.5 billion on the Rwf 1.6 trillion in the 2013/14 revised budget.
Addressing both chambers of parliament, Minister Gatete noted that in 2015/16 fiscal year government will implement aggressive reforms to address the vulnerability of agriculture production, ensure fast implementation of both private and public projects in the industrial sector and to promote thriving services.
“The reforms will entail addressing energy supply constraints, prioritization of infrastructure towards productive uses; implementing a private sector led approach to exports and intensifying efforts to increase agriculture productivity,” Minister Gatete said…..
2014-15 Economic Performance
Minister Gatete noted that the performance of fiscal year 2014/15 was driven by favorable weather conditions that contributed to high growth in agriculture.
Lower oil prices and low inflation environment favored trade and services.
“It is under the above backdrop that the economy grew by 7% in 2014 well above 2013 growth of 4.7%. The services sector grew by 9% compared to 5% in 2013,” Gatete said.
In 2014, external trade deficit increased to $1.3 billion or 16% of GDP due to increased imports of capital and intermediate goods.
Inflation remained in single digits, exchange rate was market driven as the Franc depreciated by 3.6% in 2014, compared to 6.1% for 2013. Credit to private sector grew by 19.6% in 2014 compared to 11.1% in 2013.
The July-December 2014 budget execution was complicated by delayed donor disbursements. Equally, lower domestic revenue performance played a role with a Rwf 9.8 billion shortfall in tax revenue collections from Rwf416.1 billion projected for the period.
Medium term fiscal strategy
Fiscal year 2015/16 is the third year of Economic Development and Poverty Reduction Strategy (EDPRS2) implementation and is expected to consolidate on economic performance of 2014.
The economy is expected to grow by 6.5% in 2015 and 2016 respectively compared to 7% registered in 2014. Agriculture is expected to grow by 5.2%, industry by 8.4% and services by 7.2 %.
Inflation is projected not to exceed 3.5% by end 2015. In the medium term it is expected to be contained at 5%. Exports in 2015 are projected to grow in value terms by 6% rising from US$ 723.1 million in 2014 to US$ 764.4 million in 2015.
Imports in value terms are projected to increase by 7% in 2015 and decline by 2% in 2016. Capital and intermediate goods imports will contribute a large share in 2015 for the implementation of delayed projects and will impact negatively the trade balance deficit, as well as current account balance.
Gatete said increased revenue mobilization and expenditure prioritization will remain the key objective in the medium term to reduce reliance on donor funds.
Total donor support grants amounted to 9.2% of GDP in 2013/14 then declined to 7.3% of GDP in 2014/15 and is now projected to decline to 5.7% of GDP in 2015/16. It will decline to 4.6 % and 4.7%% for 2016/17 and 2017/18 respectively.
2015/16 Budget resources
With a projected Rwf 1,768.3 billion expenditure, total domestic revenue collections are estimated at Rwf1,038.1 billion (17.5% of GDP). Of this amount Rwf938.6 billion is expected to come from tax revenue and Rwf99.5 billion from non-tax revenue.
Total grants are projected at Rwf358.4 billion against Rwf 417.1 billion in 2014/15, showing a reduction of Rwf58.8 billion. Total loans are projected at Rwf233.2 billion, Rw20.6 billion higher than the Rwf 212.6 billion in the revised 2014/15.