Rwanda plans to increase its budget for the fiscal year starting in July by 16.7 percent to help accelerate growth and reduce poverty, the Ministry of Finance said on Friday.
It said in a statement that growth would slow to 7 percent this year due to the adverse impact of higher food and fuel prices, which would also push the inflation rate to 7.5 percent by the end of 2011.
Fuel prices in the country have increased twice this year. The cost of premium petrol and diesel rose from 887 francs to 1,015 francs per litre in January and then to 1,060 francs per litre in April.
The government attributed the increases to political instability in oil producing nations of the Middle East.
“In 2011, output growth is projected at about 7 percent, showing a slight slow-down from 2010 due to the expected adverse impact of rising food and fuel prices,” the ministry said.
“These are expected to push domestic prices and inflation is now projected to reach 7.5 percent at end of 2011.”
The economy expanded by 7.5 percent in 2010, according to the National Institute of Statistics of Rwanda.
Rwanda’s inflation rate in urban centres rose to 4.11 percent in March from 2.56 percent in February and the central bank expects it to hit 6 percent by the end of June.
The ministry said the country’s 2011/12 budget would rise to 1.116 trillion francs from 984 billion in 2010/11. The budget will be unveiled in mid June.
“Fiscal policy in the period 2011/12 to 2013/14 will seek to balance the competing objectives of further accelerating growth to make a dent on poverty reduction whilst preserving the medium-term fiscal and external sustainability,” it said.
“The medium term budget policy is to increase expenditures for investment projects that generate more impact on growth, while limiting recurrent costs,” the ministry said.
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