The development was revealed by Finance and Economic Planning minister Uzziel Ndagijimana while presenting the Budget Framework Paper to Parliament on Thursday, May 21. He also said that the plan prioritizes activities that will accelerate the economy, including agriculture, private sector development and youth employment, transport, and energy.
Ndagijimana told Members of Parliament that the budget for the fiscal year 2020/21 will reflect medium-term fiscal path which allows for increased spending to reach National Strategy for Transformation (NST1) goals while maintaining public debt at sustainable levels.
“The proposed total resources estimated for fiscal year 2020/21 amount to Rwf 3,245.7 billion. This amount is made up of Rwf 1,605.7 billion of domestic tax and non-tax revenue, external grants of Rwf 492.5 billion and external loans of Rwf 783.4 billion,”
“Total tax revenue collections are projected to reduce to Rwf 1,421.4 billion in 2020/21 which is Rwf 147.6 billion short of Rwf 1,569.0 billion projected in the 2019-20 revised budget. The decline in tax revenue collection is a result of the economic effects of COVID-19 pandemic,” Dr. Ndagijimana said.
At least 57.2 per cent of the total budget will go towards job creation and entrepreneurship promotion, Made in Rwanda promotion, as well as development of border facilities, and industrial parks.
Ndagijimana told parliamentarians that export promotion, increasing electricity access, accelerating transport projects, and increasing agricultural productivity, are among the priority areas.
According to the framework, Government is expected to spend Frw3,245.7 billion in 2020-2021 fiscal year, which is Rwf228.7 billion higher than the revised budget estimates of Rwf3,017.1 billion.
Of this, Rwf1.8 trillion has been set aside for all economic transformation activities for July 2020 - July 2021 financial year.
“In line with the plan to address the impact of COVID-19 on the economy and the well-being of the people, the budget for 2020-1021 will focus on implementing the government’s economic recovery plan,” Ndagijimana said.
The budget will also facilitate small and medium sized businesses (SMEs) to access finance, and the Government expects to provide startup capital to agribusiness.
The Rwanda Development Bank (BRD) will continue to be recapitalized to enable it to play an increased role in the expansion of the private sector to accelerate growth, according to the framework paper.
Some Rwf 7.2 billion will be invested in BRD next year, while the national carrier RwandAir whose operations have been adversely affected by the pandemic will be financed at Rwf145.1 billion.
The Minister told parliamentarians while presenting the draft budget that the Government will particularly prioritise healthcare and agriculture, among other things.
“We shall place more focus on building a sustainable health system through establishing hospital infrastructure, availing medical equipment, and providing training to healthcare workers,” he said.
At least Rwf 248.87 billion has been allocated towards the health sector.
Similarly, cash crops production for export will be strengthened through increased production of coffee and tea, as well as expropriation for new investments in tea production while post-harvest losses will be reduced through establishing new drying shelters and storage facilities.
Agriculture production could be affected by bad weather conditions, despite efforts put in place to be more climate resilient, according to the Finance Minister.
The agriculture sector, which will receive some Rwf 92.2 billion in the new draft budget, currently represents 24 percent of our Rwanda’s gross domestic product (GDP).