Rwanda Sells Major Bank to Finance Bugesera Airport

Finance Minister Claver Gatete today presented to parliament the revised budget statement for the year 2016-17

The expected Rwf11.5billion from the sale of the government’s stake in local I&M Bank will be invested into the new Bugesera International Airport – currently under construction, Finance Minister Claver Gatate told parliament Tuesday.

Next week on Tuesday, Government will flat 99,000,000 shares for initial public offering (IPO) of its 20% stake in I&M Bank, owned largely by Kenyan firm I&M Holdings. The revenue from the sale will be invested as initial Government equity in the Bugesera Airport project.

Phase I of the $818 million airport will consume $418 million, scheduled for completion by December 2018. Portuguese firm Mota Engil Engenharia e Construcao Africa will deliver the facility with a capacity to receive 1.7 million passengers every year.

Upon completion of this phase, extension works will be undertaken, to upgrade the capacity to 4.5 million passengers annually – costing up to $400m.

The announcement by Gatete was contained in a statement presented to lawmakers for revision of the 2017 budget. Total budget spending has been increased by Frw 4.9 billion from Frw 1949.4 billion approved by Parliament in June 2016 to  Frw 1954.2 billion.

Government proposes Frw 3.9 billion net increase in domestic resources from Frw 1,182.4 billion to Frw 1,186.3 billion. It expects a rise in tax revenues of Frw 9.8 billion from increased Value Added Tax (VAT) collections as well as increase in non-EAC imports. However non tax revenues are expected to decrease by Frw 5.9 billion on account of lower administrative services fees projected.

Government estimates grants to reduce by Frw 38.8 billion from Frw 365.3 billion in the 2016/17 original budget to Frw 326.6 billion. The reduction is mainly due to expected lower disbursement of Global Fund grants.

Total loans for the revised budget are expected to increase by Frw 7.4 billion on account of World Bank loan for agriculture sector and exchange rate gains due to depreciation of the Rwandan franc. This will push total loans from Frw 367.7 billion in the original budget to Frw 375.2 billion.

Expenditure 

Included in the revised budget is Frw 11.5 billion expected from the sale of government stake in I&M bank (Rwanda) Ltd. The money will be invested as initial Government equity in the Bugesera Airport project.

Government also expects increase in domestic financing by Frw 20.8 Billion from the use of Government bank deposits from Frw 34.0 billion recorded in the original Budget for fiscal year 2016/17. This increase would push overall domestic financing to Frw 54.8 billion.

Government proposes Frw 47.9 billon increase in recurrent expenditure from Frw 945.7 billion approved in the original budget to Frw 993.6 billion. The increase will cater for additional allocation on wages and salaries, additional allocation on recurrent non-wage expenses such as pre-financing of the UN Peace Keeping operations, debt servicing, Rwanda Correction Service and National Electoral Commission spending shortfalls, Iwawa Rehabilitation Center’s Operations among others.

Development budget is expected to decrease by Frw 7.8 billion from Frw 785.7 Billion approved in the 2016/17 original Budget for 2016/17 to Frw 779.9 billion. On domestically funded projects, the change reflects the cut on allocation of Global Fund projects due to the reduction of initially projected disbursements.

However, additional funding was provided on other key domestically funded projects including spending shortfall in taxes & expropriation on infrastructure projects, Oil & Gas exploration project, E-passport, Valley dams, High Commercial Court among others. On externally funded projects, the net increase of Frw 2.5 Billion reflects mainly gains from exchange rate depreciation.

 




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