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Understanding Rwanda’s key budget expenditures.

June 23, 2021

By Jean d’Amour Mbonyinshuti

Dr. Uzziel Ndagijimana, the Minister of Finance and Planning heading to parliement to present to both chambers the 2021-22 bufget. Courtesy

Dr. Uzziel Ndagijimana, the Minister for Finance and Economic Planning on Tuesday presented the budget to both chambers of parliament and defended the 9.8 per cent increase in government spending from Rwf3,464.8 billion in the 2020/21 fiscal year to Rwf3,807 billion in the fiscal year 2021/22.

In the virtual presentation Ndagijimina told members of the parliament that the government expects that Rwf2,413.7 billion representing 63.4 percent will go into recurrent expenditure while Rwf1,393.3 billion will be spent on development related initiatives.

The recurrent expenditure is significantly higher than the Rwf1, 595.4 billion in the revised fiscal budget of the current financial year 2020/21. 

The increase in recurrent expenditure is mainly driven by increased allocations for employees’ wages arising from ongoing restructuring exercises including the creation of new structures in the public sector.

Among the key sectors undergoing restructuring are education and health sectors which have new recruits as well as increases in allowances of the security agencies.

Government will also spend up to Rwf256.6 billion for interest payments which will go into covering interest on external debt (Rwf94.4 billion) and domestic debt.

Minister Ndagijimana said that  over Rwf60 billion has been earmarked for equity and investment fund shares which will be  spent on aspects such as ongoing recapitalization of Development Bank of Rwanda as well as the inclusion of some investment projects for export diversification as well as allocation such as Bugesera Airport Company.

Infrastructure sector also stands to benefit in the next fiscal year budget especially in road network, electricity rollout value addition in the agriculture sector among others.

Several projects in the agriculture sector also set to have capital injections such as maintenance of cereal storage Rwf2.2 billion, agriculture research and development Rwf3.2 billion, the establishment of milk diaries Rwf8.6 billion, according to the minister.

Preparatory works for Gabiro Agribusiness Hub in Eastern Province will also get Rwf25 billion, he added.

Farmers are also set to benefit from feeder roads which have been allocated Rwf24.9 billion.

In the road network, there are plans to expand the road network under infrastructure development with over Rwf60 billion allocated for the construction of roads across the country.

The education sector was also not left behind as about Rwf35.6 billion will go into building and maintenance of schools while Rwf25.1 billion will go into improving the quality of basic education including the hiring of trained teachers.

University of Rwanda will see about Rwf3.9 billion go into facilities development.

The budget also made provisions for expansion and purchase of strategic fuel reserves which could serve to accommodate growing fuel consumption and fluctuations of prices on the international market.

The budget will also see ICT sector developed especially in further installation of CCTV cameras in public places with expenditure to reach Rwf1.6 billion, cyber security projects Rwf2.7 billion and establishment of innovation hubs Rwf2 billion.

MPs react on the budget

Following the presentation of the budget, some members of the parliament have raised concerns of whether the budget will benefit low income citizens.

Others talked about the sourcing and mobilization process as the world is being ravaged by COVID-19 pandemic.

“The budget should have given priority to small and medium business owners like motel owners and small businesses that were also affected by Covid-19 and not only focus on the big companies,” said MP Frank Habineza.

“How will the projected growth be attained yet the pandemic which caused problems is worsening? Sixty-seven per cent of the budget will be funded by domestic revenues how will this happen when the virus is still here and we are still fighting it?” wondered Gloriose Uwanyirigira

She asked for measures in place to ensure that all the projects are well implemented while citizens are being protected.

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