The Government of Rwanda is set to spend Rwf.3.8 trillion in the 2021/22 fiscal year, with a huge chunk of the budget allocated to economic recovery activities and efforts to combat the New Coronavirus pandemic, which continues to have an effect on the economy.
The Minister of Finance and Economic Planning Dr. Uzziel Ndagijimana on Tuesday presented to Parliament the Fiscal Year 2021/22 National Budget under the East African Community theme: “Economic Recovery through industrialization and inclusive growth”.
Addressing both chambers of Parliament, Minister Ndagijimana pointed out that the fiscal policy of 2021/22 will prioritize spending to deliver on investments aimed at achieving National Strategy for Transformation (NST1) goals.
“Significant budget spending will focus on the needs under the Economic Recovery Plan and the National Strategy for Transformation with much attention to the key economic sectors, as well as the rollout of the Covid-19 vaccination program,” Minister Ndagijimana said.
The total resources estimated for the fiscal year 2021/22 will amount to Rwf3,807 billion. According to the Ministry, this amount is made up of domestic revenues amounting to Rwf1,993.0 billion comprising Rwf1,717.2 billion from tax revenue and Rwf275.8 billion from other revenue collection.
External grants are estimated at Rwf612.2 billion whilst external loans of Rwf651.5 billion is envisaged for accrual to the Treasury.
Equally to the projected resources, total expenditure in the fiscal year 2021/22 is projected at Rwf3,807 billion. This figure is made up of recurrent spending of Rwf2,431.7 while capital spending worth Rwf 1,393.3 billion.
Furthermore, projected spending includes an amount of Rwf5.7 billion on inventory, Rwf43.8 billion under various equity investment and fund shares for government and loans spending amount of Rwf134.9 billion
NST-1 and Resources Allocation
According to Dr. Ndagijimana, Government’s expenditure policies in fiscal year 2021/22 are guided by National Strategy for Transformation priorities and objectives.
As a result, the Economic Transformation pillar takes the lion’s share of the resources at Rwf2,234 billion amounting to 58.7 % of the total budget. Social transformation will take up Rwf1,034 billion (27.2 %) while Transformational Governance is allocated Rwf538 billion representing 14.01% of the total budget.
In line with NST-1 strategic objectives, some of the priority areas agreed during planning and budgeting consultations formed the basis for resource allocation in 2021/22 fiscal year as shown below;
Agriculture productivity will be increased through scaling up use of inputs. About Rwf2.2 billion will be spent on maintenance of cereal storage while agriculture research and development will get Rwf3.2 billion.
The government will spend Rwf8.6 billion on establishing milk collection centres. The government is also set to invest Rwf25bn in the setting up of Gabiro Agribusiness Hub.
Some Rwf24.9 billion has been allocated to the development of feeder roads to support agriculture value chains.
Increasing access to electricity and access to clean water through construction of water supply systems are other areas the government has prioritized.
Promoting urbanization will include execution of urban development project in secondary cities. Affordable housing projects will be supported with basic infrastructure.
Accelerating transport projects and construction of national roads will be prioritised through the expansion of the road network with over Rwf60 billion allocated for the construction of key roads such as Kibugabuga-Shinga-Gasoro, Nyagatare-Rukomo, Kagitumba-Gabiro, Sonatubes-Gahanga-Akagera and Ngoma-Ramiro Road as well as the road linking Southern and Eastern Provinces.
Promoting innovation and increasing digital literacy will also have a share of the budget with a Rwf2 billion investment while investment in key ICT projects has also been considered, such as Rwf2.7 billion which will be spent on boosting cyber security.
With the COVID-19 pandemic still a challenge, the government will invest a huge chunk of the budget in strengthening the health system by increasing access to quality health. Rwf42.9 billion has been allocated to vaccination activities.
In line with improving the quality of education, the government will spend Rwf35.6 billion on building and maintenance of schools while Rwf25.1 billion will go into improving the quality of basic education including hiring of trained teachers.
Similarly, University of Rwanda (UR) will be allocated Rwf3.9 billion for infrastructure development.
Resuscitating the Economy
Dr. Ndagijimana said that during this fiscal year, efforts will go towards strengthening social protection programs by scaling up the coverage of social protection programs and supporting businesses to recover.
Rwanda’s economy shrunk by 3.4 per cent recession in 2020 due to the COVID-19 pandemic, prompting the government to increase public spending by 9.8 per cent in the 2021/22 fiscal year, with a hope that the injected capital will spur a 5.1 percent economic growth rate.
Dr. Ndagijimana said that the economy is expected to grow by 7 per cent in 2022 and 7.8 per cent in 2023 before rebounding to the Covid-19 pre-Covid-19 growth rates in 2014.
The 2021/22 draft finance bill presented to Parliament is in line with the 2021/22–2023/24 Budget Framework Paper presented to Parliament on May 5th 2021 and was amended to reflect the recommendations from the Parliament as submitted on June 3rd, 2021.