Rwanda Revises 2020/21 Budget to Cushion Economy Against COVID-19 Impact, Boost Recovery

The Minister of Finance and Economic Planning Dr. Uzziel Ndagijimana has presented a new and revised budget framework to Parliament that will enable Rwanda to deal with the economic impacts of COVID-19.

The revised budget virtually tabled to the legislative assembly will see an increase in budgets of key COVID-19 intervention areas especially in health, law enforcement in the pandemic, and increase in budget for community development programs, but also depend largely on domestic revenue collections.

“The budget revision process has been informed by the economic and budget performance for the first quarter of 2020/21 which includes the assessment of the COVID-19 economic effects and provision of necessary support to vulnerable households, create jobs and support businesses,” Minister Ndagijimana said.

Key changes in FY 2020-2021 Revised Budget

The proposed revised budget presented to parliament contains key adjustments which include rise in domestic revenues due to projected increase in taxes following recovery of economic activities and businesses and reclassification of budgetary loans to budgetary grants due to changes in disbursement plans.

On the expenditure front, the Government expects to increase recurrent spending to cater for COVID-19 related expenditures, increase in net lending outlays to support business through the Economic Recovery Fund as well as state corporations.

Resources

The proposed revisions to the 2020/21 budget reflect changes in the resource envelope as well as the corresponding adjustments on expenditures. As a result of the proposed changes, the total budget is projected to rise from Rwf3,245.7 billion to Rwf3,464.8 billion showing an increase of Rwf219.1 billion.

The government revised the budget to boost economic recovery from the COVID-19 impact.

Tax revenues are projected to increase by Rwf158.5 billion, from Rwf1,421.4 billion in the original budget to Rwf1,579.9 billion. Non tax revenue is expected to increase by Rwf20.5 billion upwards from Rwf184.3 billion to Frw 204.8 billion. Grants are expected to rise by Rwf 99.7 billion, upwards from Rwf492.5 billion in the original budget to Rwf592.2 billion.

Expenditure

Total expenditure is being raised from Rwf3,245.7 billion to Rwf3,464.8 billion showing a net increase of Rwf 219.1 billion. The expenditure has been revised to reflect changes made under recurrent spending, capital expenditure and net lending outlays.

Recurrent Expenditure will be raised by Rwf12.4 billion from Rwf1,583.0 billion from the original budget estimate to Rwf1,595.4 billion.  Capital expenditure is expected to rise by Rwf37.6 billion, from Rwf1,298.5 billion in the original budget to Rwf1,336.1 billion.

The changes majorly affect the domestically financed capital expenditures. Net lending increased by Rwf165.2 billion from Rwf306.5 billion in the original budget to Rwf471.7 billion.

This increase in the Net lending outlays are mainly allocated to the Economic Recovery Fund as the continued effort of the Government to support Businesses affected by COVID-19 pandemic outbreak.

The 2020/21 revised budget is part of the revised medium term macro-economic framework   that aims to continue fighting the COVID-19 pandemic outbreak which continues to take a heavy toll on Rwanda’s economy.

“Government will continue to closely monitor all components of the economic performance that may affect the smooth implementation of the revised 2020/21 budget, and will take any necessary corrective measures to ensure full implementation of the budget and at the same time maintain macro-economic stability” Ndagijimana said.

Many MPs were concerned about the revised budget being done at this time, meaning that there could be more money left on budget lines, however the finance minister said this will be to the advantage to forward to balances into 2022, especially that the country expects additional funding from its partners.

 




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