Rwanda increases domestic resource mobilisation to improve fiscal consolidation

Written by: Berna Namata, 9 May 2011


Rwanda’s annual budget will increase by 14 per cent in the 2011/2012 financial year as the government consolidates development spending to boost growth amid a turbulent global economic environment marked by spiralling fuel and food prices.

According to a draft budget framework presented to parliament last week, the country’s resource envelope will increase from Rwf984.0 billion ($1.65 billion) last year to Rwf 1,116.9 trillion ($1.825 billion).

“The focus for the 2011/12 financial year and the medium term is to raise adequate resources for completion of strategic investment projects that will allow forward and backward linkages to stimulate growth of other sectors,” says the Finance Minister John Rwangombwa.

The government’s strategic investments include expansion of national carrier RwandAir, construction of a world-class Kigali Convention Centre with a five-star hotel, increasing broadband access through the 2,300 km fibre-optic cable programme and increasing energy access from six per cent to 16 per cent by 2013.

Focus will be on improving health, enhancing family planning services while a new health insurance policy will be implemented.

In the fiscal year 2011/2012, donor budget support grants are estimated to increase to Rwf455.5 billion ($769.4 million) against Rwf372.5billion ($629.3 million) projected for 2010/2011.

Currently, Rwanda’s direct budget support stands at about 21 per cent.

In the new financial year, the government also plans to reduce the overall budget deficit including grants from 4.4 per cent of GDP in 2010/11 to two per cent of GDP while net domestic financing is expected to decline from 2.2 per cent of GDP in 2010/2011 to 0.3 per cent.

The minister said the government plans to further increase domestic revenue and prioritise expenditures to improve fiscal consolidation.

To achieve this, in the new financial year, the government aims to increase domestic resource mobilisation by about 0.2 per cent of GDP from 13.6 percent.

Read the whole article here


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