The government of Rwanda is poised to inject Rwf 100 billion to start a coronavirus (Covid-19) exit process and counteract the impact of the pandemic on the economy, the Minister of Finance Dr. Uzziel Ndagijimana has said.
Dr. Ndagijimana said that this funding will be able to revive internal economic activities to at least 2% of GDP growth which has already, in two months, been affected by inactivity in economic drives such as diaspora remittances and global markets.
“This is the reason why the government has initiated an economy recovery fund pool, where we intend in a week’s time to start receiving contributions from different people. The government will inject Rwf100billion for starters,” Ndagijimana said.
The Finance Minister made the remarks on Saturday while appearing on national TV soon after meeting with a Development Partners Coordination Group, a forum bringing together the Government and all development partners (DPs), to discuss Rwanda’s COVID-19 economic recovery plan.
Ndagijimana revealed that the pooled funds will be directly injected in agriculture and livestock activities to increase food security and agro exports, as the agricultural sector has been the only segment which managed to remain active with a 30% growth under Covid-19.
Other sectors to benefit from this proposed economy revival fund will include industry, tourism and hospitality, and water, electricity, road infrastructure projects among other income generating activities.
“This will be part of the Covid-19 exit and recovery plan for small and medium businesses which are facing a problem of investment capital but with a wider intention to reduce the trade deficit,” Ndagijimana said.
“The tourism and hospitality sector will have special funding because their sector will take longer to recover from this crisis.”
The infrastructure sector looks to remain covered after government officially resumed works on most of the 21 development essential projects, which was followed by signing with the World Bank a US$100 million (approximately Rwf93.1 billion) supplemental financing agreement for the 3rd Rwanda Energy Sector Development Policy Operation (DPO)- of a $375 million programmatic series since 2017.
This economic recovery funding follows another funding of Rwf50billion that was released by the Central Bank (BNR) to the financial sector (commercial banks).
The funding disbursed at central bank lending rate (less than 5%) a week into the first Coronavirus lockdown, was aimed to relieve their burden on lending and loans management, by readily availing liquid money local businesses directly affected by the pandemic.
New Hope after Covid-19
Coronavirus pandemic found Rwanda planning to balance its trade balance which was affected by the fall in global market prices in the 2019 financial year.
Last year, the agriculture sector performed at 8% in 2019, as a result of fluctuation in global market prices export commodities. Coffee dropped 10.4% and tea 5.8%, while in mining, coltan drop by 21.4%, wolfram 18.3%, cassiterite 6.7%-which dominate the country’s traditional exports.
Minister Ndagijimana said that there is hope to revive the exports markets though the prices will not be guaranteed to remain favourable.
However, in a May 9, 2020 communique the ministry (Minecofin) assured full payment of salaries for all civil servants and private sector employees affected by the pandemic and scrapping the Pay as You Earn (PAYE) taxes.
Minecofin said, PAYE will be waived for a period of six months (April to September 2020) for private schools teachers earning up to Rwf150, 000 net salary.
This waiver will apply for three months (April-June) for employees of tourism and hotels earing Rwf150, 000 net salary, and all face masks made in Rwanda are exempt from paying value added tax (VAT).