Rwanda Raises 1.6 Trillion Francs Despite Aid Cuts
The Budget Framework Paper approved at the last Cabinet meeting indicates that government spending for fiscal year 2013/2014 will increase from Rwf 1.4 to 1.6 trillion
This Budget Framework Paper outlines government spending plans as well as the budget policy over the next three years.
The main objective of this budget, especially in the face of declining aid, is to increase domestic tax revenue collections by 0.2 per cent of GDP and limit the domestic debt to 0.6 per cent of GDP.
Western countries have suspended aid to Rwanda due to her alleged involvement in the DRC conflict, a charge Kigali vehemently denies.
Britain which restored aid recently chose to channel support funds through civil groups.
Speaking about the Paper, the Permanent Secretary in the Ministry of Finance and Economic Planning Kampeta Sayinzoga said that despite a modest slowdown in the second half of the year 2012, partly due to the delay in donor disbursements, real GDP growth in 2012 was 8 percent.
“This good performance was largely driven by the expansion of the service sector, particularly communication and transport activities, which expanded by 19 percent,” she said.
Economic growth is expected to slow slightly to 7.5 percent in 2013 and a decline in services growth is projected particularly due to decline in credit to the private sector resulting from the tighter fiscal and monetary policies.
However, this is expected to be offset by an improvement in agricultural growth (6.7 percent) due to favorable weather conditions as well as the on-going investments.
“Growth in services is expected to pick up again and reach 8.9 percent, whilst industrial growth is also projected to increase slightly to 10 per cent.
Agricultural growth is expected to decelerate slightly to 5.1 per cent in 2014. In the baseline scenario initial GDP growth projections of 7 percent have been made for 2015 and 2016 respectively,’’ Kampeta concluded.