Rwanda: Budget – MPs outline government spending priorities

MPs said the proposed national budget of 4.6 trillion Rwandan francs for the financial year 2022/23 should focus on areas such as tackling the rising cost of living, supporting school feeding as well as reducing the country’s import bill.

The proposed budget represents an increase of Rwf 217.8 billion or 4.7 percent in government expenditure from the Rwf 4.44 trillion in the current year’s revised budget.

The draft budget was presented Thursday by Uzziel Ndagijimana, minister of finance and economic planning, to both houses of parliament.

On the expenditure front, the operating budget is projected at Rwf 2.79 trillion while the development budget and net lending are projected at Rwf 1.86 trillion.

When presenting the proposed financial plan to lawmakers, Ndagijimana said the budget for the next fiscal year, which will start on July 1, will focus on implementing government strategies intended to accelerate economic recovery from the Covid-19 pandemic. 19.

It also emphasizes the continued implementation of the ambitious National Transformation Strategy (NST1) – a seven-year government program running from 2017 to 2024.

Like most of the global economy, Rwanda is facing two major challenges: the negative effects of the Covid-19 pandemic and the Russian-Ukrainian war, which has triggered a spike in the prices of goods and services.

Other challenges are climate change which could hamper agricultural production.

Here’s what MPs think the proposed budget should prioritize:

Faced with the rising cost of living

MP Christine Mukabunani said rising commodity prices are making life difficult for citizens.

Furthermore, she said that there are still people who have not yet received compensation for their expropriated properties for a period of up to 10 years. Emphasizing that it is high time they received their payments to be able to cope with the rising cost of living.

“Secondly, there is a problem of low salaries, especially for teachers. Isn’t there anyway that teachers’ salaries should not be taxed, so that they receive the full their salary,” Mukabunani said.

MP Jean Claude Ntezimana said the Rwandan franc was losing value against the dollar; wanting to know what was being done to fix the problem.

Regarding the prices in the market, he wondered why they continue an upward trend.

“Although it has been said that it (inflation) is at 10%, I think it is higher,” he said.

“For example, [cooking] gasoline prices continue to rise. The government should make efforts to bring the price of gas down,” he observed, calling for support for the made in Rwanda program to reduce imports.

Minister Ndagijimana said that a currency is a product like any other and has its own market, pointing out that exchange rates are determined by demand and supply.

In the current situation where imported goods are expensive, he said, the result is that the amount of US dollars needed to pay for imports increases, which increases the value of the dollar against the local currency.

He noted that the government was working to ensure that the depreciation of the franc against the dollar does not exceed the recommended limits.

On rising cooking gas prices, he said the government was regulating the prices of imported products, while exploring the use of Lake Kivu methane for cooking and powering factory operations in the country in the long run. term.

Ensure food security

Thanks to the Strategic Food Reserve, MP Theoneste Safari Begumisa said, the country has been able to provide food aid to people in need who have been affected by the Covid-19 pandemic.

“Food safety should be given great attention, with emphasis on products that can be stored safely for a long time. [such as grains and cereals],” he said.

MP Pierre Claver Rwaka said irrigation efforts were still small compared to the pace required to ensure sustainable food security. For example, he cited Bugesera district, which has good access to water but suffers from drought [that results in crop failure].

Commenting on this, Minister Ndagijimana said that food security is important for the country, and increasing agricultural production is a government priority.

“We will ensure the availability of agricultural inputs [including seeds and fertilisers]and expand the irrigated area,” he said.

“Especially for livestock, we will put more effort into vaccination to protect them from disease,” he said.

Dealing with the rising cost of fertilizers

MP Damien Nyabyenda spoke about high fertilizer prices, suggesting that organic waste generated across the country should be turned into manure to help crops grow.

Currently, with fertilizer prices – which are subsidized by the government – local farmers have to pay Rwf 768 for a kilogram of urea, which is a 26.5% increase from the Rwf 564 they had to pay in July 2021. For DAP, one kilogram has a price at Rwf832, an increase of 23.9% from Rwf633, while that of NPK 17:17:17 has increased by 19% to Rwf882 from Rwf713 during of the same period.

Minister Ndagijimana said the government is supporting farmers by subsidizing fertilizer prices so they are not overwhelmed by them.

He said some initiatives have started making manure from organic waste across the country, adding that they will continue to supplement chemical fertilizers to increase agricultural productivity.

Reducing Rwanda’s imports to save its franc

MP Ntezimana said the Made in Rwanda program is necessary as it has proven to promote import substitution.

However, he indicated that the prices of products produced in the country are still high, which threatens their competitiveness compared to imported products.

“For this to be achieved, local businesses must be supported, including by reducing taxes on locally produced products so that they become affordable,” he said, calling for a start in exports.

MP Pie Nizeyimana said it was good that the country’s economy was expected to grow by 6% in 2022. However, he expressed concerns about the volatility in the currency market, which saw the franc lose ground by against major international currencies.

For example, in 2017, the US dollar was trading at 838 Rwf, but is currently trading at 1,031 Rwf.

He called for strategies to address the problem, including establishing a single EAC currency to reduce dependence on foreign currencies.

Closing the School Feeding Gap

MP Jean Damascène Murara wanted to know what efforts the government said it is investing in school feeding in the budget for the next fiscal year.

“When you look at the meals that students receive at school, you realize that they are lacking in nutrients. During our recent [parliamentary] tours, there are schools that we have visited and found to be unsatisfactory,

“What is the Ministry of Finance and Economic Planning’s plan to increase funding for school feeding so that students receive adequate nutrition,” she asked the minister.

Senator Ephrem Kanyarukiga said lack of access to food causes some children to drop out of school as they are weak in class and do not attend classes but their parents cannot afford school feeding fees.

“The government should prioritize school feeding in its education planning,” he said, adding that the government should review its contribution to this program as it did not reflect current market realities.

Currently, the government provides Frw 56 per student meal per day, which some parliamentarians have consistently said is low.

Ndagijimana said the government should support the school feeding initiative, but observed that parents should play a bigger role in feeding their children at school.

Education support, with a focus on TVET

MP Mediatrice Izabiliza said education should be supported, including by making teaching aids available primarily for the acquisition of practical skills in technical and vocational education and training (TVET) institutions.

Minister Ndagijimana said these needs will be taken into account in the budget, pointing out that TVET consumables such as wood for furniture making and metal materials needed for welding practices will be increased.

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