Economy to grow at 7% rate in 2011

By:Randa Rugangazi

Today, the Ministry of Finance and Economic Planning released the 2011/12 budget framework.

Igihe.com has learnt that it is projected in the budget that the country’s economy will grow at a rate of 7%. The budget details the allocation of state funds for the fiscal year 2011/12.

A budget framework paper accompanying the budget explains why certain sectors of the government will receive more or less funds in the upcoming year. It analyzes the country’s economic performance in relation to the global economy in the 2010/11 fiscal year.

Rwanda registered an estimated annual GDP growth of 7.5percent in 2010; which was higher than the projected average of 5 percent growth in sub-Saharan Africa. In 2011, the projected growth rate for Rwanda is 7.0 percent. It may however be lower due to high fuel costs resulting in higher food prices. This is a shared risk across sub-Saharan African countries.

The 2011/12 fiscal budget was put together with the main objectives of “safeguarding food supplies and ensuring food security and maintaining price stability.”

In the government’s efforts to safeguard food supply MINAGRI (Agricultural ministry) within its budget of Rwf 67, 621, 050,663 some Rwf 2.5 billion will be allotted to the construction of storage warehouses for storing food surpluses.

As for controlling the inflation rate, the government plans on reducing oil import taxes. High oil costs have been the main cause for the rising commodity prices, including food costs.

The budget framework paper points out that Rwanda’s taxes are higher than those of other EAC countries. The government will therefore lower the taxes at the same level as neighbouring East African countries.

The projected revenue and grants in 2011/12 fiscal year is Rwf 974 billion; with total expenditure at Rwf 1062.8 billion. Both accounts have increased compared to the 2010/11 fiscal numbers which were Rwf 844.2 billion for the total revenue and grants and Rwf 988.1 billion.

The deficit, difference between revenue and total expenditure, was covered by financing. This usually means that the government sells bonds or borrows domestically or internationally. The deficits for 2010/11 and 2011/12 are Rwf 155.1 billion and Rwf 98.6 billion, respectively.