Finance Minister Yusuf Murangwa during the session on Thursday
Rwanda has announced a significant increase in its national budget for the 2025/2026 fiscal year, rising by over 20% compared to the current revised budget. It is biggest growth ever.
The development comes amid growing international scrutiny and threats of sanctions over the country’s alleged involvement in the ongoing conflict in eastern Democratic Republic of Congo (DR Congo).
The Minister of Finance and Economic Planning, Yusuf Murangwa, presented the draft national budget framework to both chambers of Parliament on Thursday afternoon, outlining a total projected expenditure of RWF 7.0325 trillion for the next fiscal year.
This marks an increase of RWF 1.2161 trillion or 20.9% from the RWF 5.816.4 billion allocated in the revised 2024/2025 budget.
Despite mounting external scrutiny and fears of economic isolation, the government appears confident in its fiscal direction, banking heavily on domestic revenue mobilization and carefully selected foreign partnerships.
Where the Money Will Come From
The 2025/2026 budget will be primarily financed through domestic sources, which are expected to generate RWF 4.105.2 trillion, accounting for 58.4% of the total budget.
Foreign grants are projected to contribute RWF 585.2 billion or 8.3%, while foreign loans will cover RWF 2.151.9 trillion, representing 30.6% of the budget.
To support this ambitious revenue target, the government is rolling out a new set of 14 tax reforms over the next five years, starting in the 2025/2026 fiscal year.
These reforms will include new taxes and adjustments to existing ones aimed at broadening the tax base and enhancing compliance.
The Ministry of Finance estimates that these new taxes will generate approximately RWF 350 billion over five years, translating to an average of RWF 70 billion annually.
These additional revenues are expected to bolster domestic financing and reduce reliance on unpredictable external support.
Rwanda has made notable progress in enhancing domestic revenue collection over the past decade, supported by reforms in tax administration and a broader strategy of reducing dependence on foreign aid.
However, the drop in grant projections from previous years also reflects concerns over potential reductions in donor support, especially from Western partners who have public voiced concern over Kigali’s alleged role in destabilizing eastern DR Congo. But
Several international organizations and governments, including the United States and European Union member states, have publicly expressed concern over Rwanda’s alleged support for the M23 rebel group in DR Congo.
Although Rwanda has consistently denied these allegations, the geopolitical tension has created uncertainty around the continuity of aid and concessional financing.
How the Budget Will Be Spent
Minister Murangwa explained that the budget reflects a dual focus on service delivery and long-term investments.
Recurrent expenditure will consume RWF 4.3951 trillion, making up 62.5% of the budget. This includes salaries for civil servants, education and healthcare services, and maintenance of government operations.
Meanwhile, RWF 2.6374 billion, or 37.5%, is earmarked for development projects and capital investments. This portion will go toward infrastructure, energy, water supply, ICT, and other key sectors intended to stimulate economic growth and employment.
“Despite the challenges, the Government remains committed to inclusive growth, economic resilience, and poverty reduction,” said Murangwa, addressing legislators.
Rwanda’s decision to raise its budget significantly comes at a time when it faces heightened international criticism and the looming threat of sanctions.
The United Nations and other organizations have accused Kigali of fueling instability in DR Congo by supporting rebel groups active near the shared border.
In early 2025, the U.S. Department of State hinted at a review of bilateral military cooperation with Rwanda, while the EU has been internally debating whether to suspend certain budgetary support programs. Germany, UK and Canada have also raised their own issues and announced some slow down in relations.
Rwanda has also cut ties with Belgium, ending a relationship that brings several billions into the country. Kigali has accused Belgium of sabotaging it’s diplomatic engagements and pushing for sanctions.
Nevertheless, government remains unhinged. Kigali argues that the country has the right to protect its borders from militia threats spilling over from DR Congo, and they emphasize that the international community has failed to adequately deal with armed groups operating freely within Congolese territory.
Budget as a Statement of Stability
Analysts say that the increased budget, with a heavy reliance on internal resources and long-term foreign borrowing, reflects Rwanda’s intent to portray economic stability and strategic independence amid diplomatic turbulence.
“The message here is that Rwanda will not be paralyzed by pressure,” said one economic policy observer based in Kigali. “The country is signaling that it has a plan — and that it will fund it with or without traditional donors.”
As Parliament begins deliberating the draft budget framework in the coming weeks, attention will turn to how well the government balances fiscal discipline with development ambitions — all while navigating an increasingly complex global diplomatic environment.
Next month, the Finance Minister should return to the House for the final budget reading, which usually happens on same day as Wil all member states of the East African Community (EAC): Uganda, Kenya, Tanzania, and likely this time, Burundi, DR Congo and South Sudan.
