It’s a brave budget in very challenging times
Finance minister John Rwangombwa’s second budget reading since he being appointed minister, seeks to build on past achievements to accelerate Rwanda’s growth and poverty reduction.
Two issues stick out in this year’s theme, Building on Past Achievements to Accelerate Growth and Poverty Reduction.
First, Rwangombwa was the only minister of finance in the east African region to talk about ‘accelerating growth’ as most, if not all his counterparts are plotting how to reignite their economies battered by high fuel prices, surging inflation and weak local currencies against the US dollar.
Rwanda managed to register real GDP growth at 8.6% better than the projection for the year which was 7% an amazing feat considering real GDP growth globally decelerated to 3.9 percent from 5.3 percent in 2010 and regionally.
What happened globally was, reckless financial conduct characterized by over-spending governments, lavish lending strategies by commercial banks. Coupled with underhand market speculation by Wall Street blue-collar economists, the world was plunged into a suicidal situation that saw some governments go bankrupt and banks run out of credit due to huge non-performing loans.
As a result, African countries experienced reduced funding from donors, exports performed poorly because the buyers on international market were broke hence economic downturn.
Even as the global situation appears murky, Rwanda’s 2012/2013 budget looks ambitiously brave. Salaries of public civil servants especially teachers have been increased. This will boast domestic consumption and supplement export earnings.
Over ten roads including Kigali-Gatuna are set to be worked on and in addition to ICT and energy infrastructure, this will spur economic activity.
Government expenditure on non essentials has been slashed and the private sector will get more credit to invest which will result to job creation.
Friendly tax reforms have been announced which will increase domestic revenue and though the domestic debt is to increase, creditors are happy with repayment efforts.
BNR promises strict monitoring so inflation will be contained at 7%. On a whole, the 2012/2013 budget has been cautiously woven, giving here and taking there to strike a balance that can stand the scary times. No major taxes were announced yet Common External Tariffs (CET) on several items will be stayed for the entire fiscal year, this will boast cross border trade.
It’s therefore a good budget in bad times, a brave budget in a scary time that will deliver good results when fully implemented.