Finance minister releases preliminary budget

The budgetary allocation for agriculture in the upcoming 2011/12 budget has increased by five percent, from Rwf 64 to Rwf 67 billion.

The money, according to the Minister of Finance, John Rwangombwa, will be spent on increasing potential in the sector through promoting exports and facilitating farmers’ access to markets.

This, Rwangombwa said, is under the general framework of eradicating poverty, mainly in the rural areas. Agriculture forms one of the priority expenditures of the government’s annual budget with focus on increasing productivity.

“While we have the crop intensification programme that is having a big impact on food security, we are putting money in exports like horticulture, tapping into the potential of our rural areas,” Rwangombwa said.

The agricultural sector has grown at an average of 4.9 percent over the last five years, contributing about 36 percent to the overall national growth.

Part of the budget is allocated to Rwanda Development Board, (RDB) to strengthen the quality and quantity of commercial farming, increase diversification of new agricultural products and develop markets for the produce.

Rwanda Development Bank will also be allocated part of the funds to boost its export promotion fund, while Vision 2020 Umurenge Programme will be financed to construct markets and warehouses.

Rwangombwa said the investment is more focused on infrastructure development, agriculture for export and increase in agricultural productivity.

“This will boost not only the overall economic growth, but also promote the country’s exports,” he added.

The Finance Minister said that government expects an additional US$ 50 million from the World Bank to boost agricultural productivity in the country.

Resource allocation

Total EDPRS expenditures envisaged from the budget were estimated at RwF3, 436Bn from 2008 to 2012. This was an average of RwF687Bn per year to reach the target.

The budget has however grown in nominal terms than envisaged and the total public sector spending towards EDPRS will reach 3,673.9 billion in the financial year 2011/12, which is 7 percent in excess of the projected total expenditure of RwF3, 436 billion.

 According to the minister, the expenditure towards infrastructure cluster is well above the projected EDPRS share of 19.7 Billion of the total budget.

The expenditures in this sector has been accelerated due to its importance in creating an enabling environment for the economy to grow. Energy generation and distribution, enhancement of road networks, communication and ICT is said to have been the key projects.

Rwangobwa said that the productive Capacities Cluster at 17.9 percent of the total budget in 2011/12 is about 1.2 percent in excess of the projected EDPRS share. This is due to the unlocked productive capacities like in the private sector which is used to tap the potentials and achieve the growth objectives.

 The budget allocation to Human Development and Social Cluster at 30.5 percent is still under the envisaged EDPRS share of 34.2 percent.

This is due to the relative price levels of resources used in this cluster compared to the other two clusters whose materials are mainly imported equipment and their prices have substantially changed due to the dynamics in the international market. 

They key expenditure drivers in the Human Development and Social Cluster include Health Equipment and Transport, the Health Insurance Scheme, 9 YBE, TVET, VUP, FARG, Demobilization Program and cost sharing scheme in higher education. The budget allocation to Governance and Sovereignty Cluster is just above the envisaged EDPRS share of 29.4 percent by 0.6 percent of the total budget.

During the press meeting, the Minister said that the total recurrent budget had risen from 13.0 percent of GDP in 1997 to a high of 18.7 percent of GDP in 2005.

“ The numbers however, declined as a share of GDP to create more fiscal space for development projects. The total recurrent costs are projected to reach 14.9 percent of GDP in the financial year 2011/12. Total development budget has been low since 1994 because government spending was more focused on social sectors to secure the primary services for the people. By 2003, the share of development budget was at about 6.8 percent of GDP but this has grown to 11.7 percent of GDP in 2010/11 and is projected to reach 13 percent in 2011/12,” he said.