The Ministry of Finance and Economic Planning has said that the government has put in place measures to absorb economic shocks currently affecting the country as a result of the war in Ukraine and the COVID- 19 pandemic.
With the global economic shocks of the pandemic and increase in prices of fuel and goods, Finance Minister, Uzziel Ndagijimana said that Rwanda has put in place measures to address these concerns in a long term.
For instance, on internal inflation mainly caused by increase in prices of agro products, the minister said that the focus will be on increasing agricultural output through providing more fertilizer subsidies to farmers and monitoring of the planting seasons.
The latest African Seed Access Index has released a Rwanda country report where the government has subsidized seed and fertilizer access to farmers with a budget of US$ 30M in 2020 ($ 9M for seed and $ 21M for fertilizer).
Ndagijimana said that this effort can be deterred by weather changes as seen in the last season where the agriculture sector dropped from 7% to 6% in 2021, but other causes of inflation (global) which the country has control over will be handled.
For example, Ndagijimana said that for a good period till to date, the government has subsidized the fuel prices to cushion increased pump prices and reduce the impact of shortage of fuel and increased global prices.
“Fuel prices would be higher than the current ones but this is because the government is subsidizing fuel prices to have pump prices remain lower and controllable even if they remain high elsewhere,” Ndagijimana said.
“For instance in the last two months alone, the fuel subsidy has cost the government over Rwf14billion. This is expensive but all is intended to absorb the price increase.”
The minister was briefing the local press this June 30, 2022 a day after the parliament passed a 2022-2023 budget bill (worth Rwf4, 658 billion) that will focus on economic recovery with 57% to be internally generated and 43% external funding.
The minister added that the government will also continue to keep the transport costs lower (which has been the case for three years) to enable the service and transport sector to continue functioning to address the expected shocks.
To shock absorb the effect of COVID-19, the minister said that the economic recovery fund has been increased from Rwf100billion to Rwf350billion, and this will be spread through the private sector funding.
He said that this will enable an economic recovery and that the country’s economy will continue growing steadily with an average of 6% annually following a very impressive recovery in 2021 with 9.5% despite the pandemic.