Rwanda relies on domestic market to finance budget
The East African - 3 hours ago
Estimates for government expenditure are expected to be higher than
last year's when Finance and Economic Planning Minister Clever Gatete
joins his regional counterparts in presenting the budget for 2014/15
on Thursday.
The government is projecting in the next fiscal year a budget of
Rwf1.7 trillion with domestic revenues accounting for the biggest
portion as it reduces donor dependency from the current 40 per cent to
38 per cent next year.
The government is allocating funds according to its priorities in
order to meet its development and expenditure targets.
While raising the necessary funds from domestic market to finance its
expenditure, government is increasing taxes for some sectors among
them telecoms which has seen airtime excise duty increased from 8 per
cent to 10 per cent.
Consumers and vendors of airtime have raised concerns regarding the
new budget, saying it is not pro-business.
READ: Mobile calls to cost more as duty on airtime is increased
"Unlike telecoms agents, airtime business is already struggling
especially for us vendors because of low profitability and with
proposed increase in taxes it might suffer more," said Jackeline
Uwimbabazi, airtime vendor in the city centre.
Government is also likely to tighten the taxation measures next year
after failing short of its collection revenues for two quarters in a
row.
READ: Cost of trade to rise in new tax reforms ahead of budget
However, players in construction sector has already called on the to taxes.
Rwanda's construction sector has been affected by high taxes for the
construction materials most of which are imported.
Last year, government imposed 25 per cent tax on building materials
and the industry is attributing the low development in the sector to
this fact.
"There is still a need for reduction of taxes for construction
materials, which have been imposed in the past if we are to see the
sector develop," said Charles Haba, the president of Real Estate
Association.
In the next year, government is prioritising economic transformation.
The government has set aside Rwf438.8 billion for the economic
transformation pillar with the energy sector taking Rwf168.2 billion.
Rwanda is prioritising the energy sector in order to grow the
manufacturing sector by 14 per cent annually by 2020.
Information and Communication Technology and environment and natural
resources received Rwf22.2 billion and Rwf22.6 billion respectively.
Youth and decentralisation programmes received under the economic
transformation pillar were allocated Rwf837,443,182 million and
Rwf101,471,964 respectively.
The government has also established rural development thematic area to
accelerate development.
Rural development
The objective of rural development is to improve the quality of life
and economic wellbeing of people living in rural areas. The programme
is expected to reduce rural poverty, which in Rwanda remains wide
spread even though it has reduced significantly over the past decade.
The focus in 2014/15 budget will be on increasing productivity through
increasing private sector investment.
This will be achieved through engaging more with the private sector
and completing supporting instruments.
Under this pillar, agriculture and health sectors are taking a huge
chunk of the budget of Rwf54.3 billion and Rwf54.2 billion
respectively.
Social protection under the rural development thematic area was
allocated Rwf53.3 billion.
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