theme: “stimulating the economy to safeguard livelihoods ... · budget speech financial year...

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REPUBLIC OF RWANDA

Ministry of Finance and Economic Planning

BUDGET SPEECH

FINANCIAL YEAR 2020/21

PRESENTED TO BOTH CHAMBERS OF THE PARLIAMENT OF THE

REPUBLIC OF RWANDA ON JUNE 22nd, 2020

BY

Dr Uzziel NDAGIJIMANA

MINISTER OF FINANCE AND ECONOMIC PLANNING

Theme: “Stimulating the economy to safeguard livelihoods, jobs, businesses

and industrial recovery”

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A. INTRODUCTION

Honourable President of Senate,

Honourable Speaker of Chamber of Deputies,

Honourable Vice Presidents of both Chambers,

Honourable Members of Parliament,

1. As provided under article 162 of the Rwanda constitution of 2003 as amended

in 2015 as well as articles 35 and 38 of the Organic Law on State Finances

and Property, I have the honour to present to you on behalf of the Government,

the Budget for the fiscal year 2020/21 and Economic Policy for the medium

term.

2. The budget framework paper for 2020/21 and the medium term was presented

to you on 21st May this year upon which I take this opportunity to thank you

for your valuable comments which were very instrumental during the

preparation of this 2020/21 draft finance law.

3. The theme for 2020/21 budget is “Stimulating the economy to safeguard

livelihoods, jobs, businesses and industrial recovery”. This theme was

chosen by all EAC Finance Ministers to demonstrate our total commitment to

economic recovery from the COVID19 pandemic as well as safeguarding

lives, jobs, business and industrial recovery. This commitment is also in line

with the content of the seven-year Government Programme of the National

Strategy for Transformation (NST1). In the 2020/21 budget and the medium

term, we intend to increase the production in different sectors and enforce

policies to create additional jobs.

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4. This budget and economic policy statement for fiscal year 2020/21 is

organised as follows;

a) First, I will provide a brief summary of the global economic

performance for 2019 and the projections for 2020/2021. This summary

will also include the performance and outlook for sub-Saharan

countries.

b) Secondly, I will be providing a brief summary of domestic economic

performance and the execution of the 2019/20 budget and the key

results in some priority sectors as of end May 2020.

c) In the third section, I will present the Government’s medium term

macro-economic framework covering the period 2020/21 to 2022/23.

d) The last section will focus on details of Government’s budget and

economic policy for the fiscal year 2020/21. In this section, I will talk

about the allocation of resources consistent with our policies towards

economic recovery from the COVID19 pandemic and the seven-year

Government development programme of NST1, and also in line with

the recommendations from the parliament on FY2020/21 Budget

Framework Paper.

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B. DOMESTIC ECONOMIC PERFORMANCE IN 2019 AND

OUTLOOK FOR 2020/21





5. Planning and Budgeting for FY2020/21 based on the economic achievements

registered in 2019, the impact of COVID19 pandemic and economic policies

to mitigate its effects and the NST1 that started in 2017 and will run up to

2024.

6. The economy recorded a good performance of 9.4% in 2019 compared to the

growth recorded in 2018. This is mainly attributed to the good performance

across all sectors of the economy which are; Agriculture, industry and service

sectors;

a) The Agriculture sector increased by 5% mainly driven by food crops

which grew by 4%, Export crops that grew by 5% and livestock

products that grew by 11%.

b) The industry sector increased by 17% driven by construction and

manufacturing which increased by 33% and 11% respectively. This

illustrates the positive impact of promoting the Made in Rwanda policy.

c) The services sector increased by 8% driven by trade increased by 16%

in wholesale & retails trade of locally made and imported products,

12% in transport services boosted mainly by 17 percent increase in air

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transport activities, 8% growth in financial services and 10% in hotel

& restaurant services.

7. Starting at the lowest level in the first semester of 2019, The headline inflation

increased progressively in the second half of 2019 to stand at 6.7% in

December 2019, mainly driven by food prices. The annual average headline

inflation stood at 2.4% in December 2019 well below the 5% initially

projected.

8. Regarding the external sector, the overall balance of payment improved by

US$121.5 million, this led to the improvement in the gross international

reserves which stood at US$ 1,440 million in 2019, corresponding to a

coverage of 5.5 months of imports of goods and services compared to 4

months’ initial target coverage.

9. The trade deficit deteriorated by 17.2% to US$ 1,072 million from US$ 915

million in the previous year 2018.This was driven by a 3.7% rise in exports in

2019 compared to a 9.7%increase in imports in 2019 after 8.6% increase in

2018. This small increase in exports was especially due to the drop in

international commodity prices. The prices of Cassiterite dropped by -7.2%,

Coltan by -23%, Wolfram by 18.8%, coffee by -8.8%, and tea by 4.8%.





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10. Following a good economic growth in 2019 and in the last 20 years, it is

evident that this growth was slowed down in 2020 by the COVID-19

pandemic even at a global level.

11. The impact of COVID-19 pandemic to both the global and our domestic

economy, led to the revision of global growth projections downwards.

According to World Bank’s report of June 2020, Global growth is projected

to contract sharply by -5.2% in 2020. For Advanced economies, growth will

contract by -7%, for Euro area growth will contract by -9.1%, United States

by -6.1%, Japan -6.1% China by -1%. The economic growth in Sub-Saharan

Africa (SSA) is expected to contract by -5%.

12. Due to the impact of COVID-19 pandemic on both the global and domestic

economy and actions already in place by Government to mitigate its economic

impact, our economy is projected to grow by 2% in 2020. For the medium

term, the economy is expected to recover with growth reaching 6.3% in 2021,

and back to its 8.0% trend by 2022.

13. The agriculture sector is expected to grow by 2.8% in 2020 due to weather

changes and a drop in international prices of export crops; the industry sector

is expected to grow by 4% driven by construction projects and manufacturing

that resumed after the lockdown; the services sector projected to grow at only

1%, is due to impact of the COVID-19 crisis especially on the tourism and

hospitality industry.

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14. According to the recently released GDP data for the first quarter by the

National Institute for Statistics of Rwanda (NISR), GDP growth for the first

quarter of 2020 was 3.6% mainly due to the effects of the COVID-19

pandemic and disasters caused by heavy rains which negatively affected the

agricultural output of rice, beans, Irish potatoes and vegetables from season

A.

15. Prices remained high in this first part of the year, Inflation from January to

May 2020 was on average at 8.4%. The higher outturn of inflation can be

explained by several factors:

a) An uptick in inflation originated from sharp food price spikes due to

disasters caused by heavy rains which negatively affected the

agricultural output of rice, beans, Irish potatoes and vegetables from

season A.

b) An increase in administered transport prices.

c) From January to May 2019, headline CPI averaged to 0.62 percent, as

food CPI remained disinflationary (averaging to -3.3 percent).

The average inflation for 2020 is projected at 6.9 percent. Inflation is expected

to be contained at 1 percent in 2021 and at 5 percent in the medium term.

16. On the external front, the formal trade deficit widened by 16.4 percent in

January-April 2020 compared to the same period last year.

17. Almost all export categories showed a decline of 23.7% due to due to the

drop in international commodity prices. The value of tea exported increased

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by 22.9%, Coffee revenue decreased by -49.2%, while the value of Coltan and

Cassiterite dropped by 37.8%. Because of a drop in international commodity

prices, the price of coffee decline by -8.1%, Coltan by -5.5% and Cassiterite

by -9.5%.

18. Imports increased moderately in January-April 2020 by 2.5% driven by

import of Energy and Lubricants (+12.2%) from petroleum and lubricating

oils and import of Consumer goods (+11.4%) from foods and health care

products.

19. Travel receipts (revenue from foreign visitors coming to Rwanda) dropped

by 35% in the first quarter of 2020 compared to the same period last year.

20. Revenues from export of goods (minerals, tea, coffee…) are projected to

reduce by 19% in 2020, both from the drop in commodity prices and reduction

in export volumes and services; tourism flows due to travel restrictions and

reduction in remittances will weigh heavily on the external sector. Revenues

from travel and air transport are projected to be lower by 70% and Foreign

direct investment (FDI) will be lower by 62%. Imports of goods will be lower

by 7% in 2020 due to disruptions of global trade and lower oil prices.

21. On the monetary front, the National Bank of Rwanda continued to implement

an accommodative monetary policy. This is likely to continue especially to

support the economy during this COVID-19 period. In December 2019, broad

money grew by 15.4% from an increase of 15.6% in December 2018 mainly

driven by an increase in Net Foreign Assets of 8.7%. The credit to private

sector increased by 12.6% in 2019 compared to 10.8% in the previous year.

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22. Regarding the monetary and exchange rate policy, the Rwandan francs

depreciation against the US Dollar stood at 4.5% in 2019 compared to 3.6%

registered in 2018.

C. THE 2019/2020 FISCAL PERFORMANCE





23. After giving highlights of the economic global and performance, allow me to

present to you the fiscal performance for 2019/2020 fiscal year.

24. Regarding the fiscal performance, the Parliament approved the revised

budget of FRW 3,017.1 billion on February 26th 2020. The budget execution

of the three quarters of the fiscal year 2019/2020 based on the revised budget

was generally on track.

25. At the end of March 2020, total resources that accrued to the budget

amounted to FRW 2,246.7 billion which registered a shortfall of FRW 153

billion compared to FRW 2,399.7 billion projected for the period due to

sluggish performance in the areas of domestic tax and non-tax collections as

well as delayed disbursement of both grants and loans in the January-

March2020 period. Total tax revenue collections of FRW 1,140.5 billion were

FRW 25.9 billion lower than the estimated amount FRW 1,166.4 billion

mainly due to the COVID19 pandemic that affected economic activities.

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Total non-tax revenues collections were FRW 172.9 billion was 19.3 billion

FRW lower than the projected figure of 192.2 billion FRW.

26. Total external disbursements of FRW 875.5 billion registered a shortfall of

FRW 30.3 billion compared to FRW 905.8 billion estimated at the end of

March 2020 and the delayed disbursement of budgetary grants caused the

shortfall. The total budgetary grants disbursed by the end of March 2020 were

FRW 303.4 billion and registered a shortfall of FRW 30.8 billion compared

to the FRW 334.2 billion initially projected.

Regarding the outlay performance from July 2019 to March 2020, total

expenditure and net lending amounted FRW 2262.5 billion and was FRW 38

billion lower than the figure of FRW 2300.5 billion projected.Based on the

current budget execution, the revised budget for 2019/2020 will be executed

as planned.





27. After giving the highlights of the implementation of the budget for 2019/2020

fiscal year, I would like to bring to your attention some key sector

achievements by the end of May 2020.

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a) Agriculture sector

28. The following are key achievements in agriculture sector:

In order to improve production of priority crops on consolidated sites, the

production on planted areas in season A stood as follows; 355,000 MT of

maize produced on 221,521 ha planted, 226,570 MT of Beans obtained on

362,199 ha planted, 52,225 MT of rice produced on 14,507 ha planted, 12,284

MT of Soybean produced on 24,677 ha planted, 578,545 MT of Cassava

produced on 190,447 ha planted, 427,471 MT of irish potatoes produced on

51,516 ha planted, 4,138 MT of wheat produced on 4,187 ha planted.

With regards to increasing local seeds production to reduce seeds importation

whereby 1750 MT of seeds maize against a target of 1,700 MT were produced,

258 MT of wheat were produced, 192 MT of bean seeds produced against a

target of 150 MT,160 MT of rice produced against a target of 150 MT, 290

MT of Soybean produced against a target of 200 MT. On the side of roots and

tubers, 22,949 MT of irish potatoes ag and 80,000,000 of cassava cuttings

were also produced against a target of 14,000 MT and 70,000,000

respectively.

In order to protect soil against erosion, radical and progressive terraces were

constructed; whereby 4,587 ha of radical terraces constructed against 2,710

ha that was planned and 12,944 ha of Progressive terraces constructed against

8,279 ha planned.

Regarding animal health and genetic improvement, 87,046 cows were

inseminated and 31,121 calves were born. A total of 180,715 cows were

vaccinated against BQ; 98,580 animals Vaccinated against FMD; 602,518

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animals vaccinated against LSD ; 317,836 animals vaccinated against RVF

and 44,745 animals were vaccinated against Brucellosis .

In line with the implementation of agriculture insurance policy; 11,773 cows

were insured and 9,476 ha of rice and 353.6 ha of Maize were insured.

With regards to external revenue generation, 18,085 MT of coffee were

exported and generated US$ 56 Million; 24,147MT of Tea that generated US$

70 Million; 16,600 MT of Pyrethrum that generated US$ 3 Million; 24.61 MT

of horticulture produces that generated US$ 3 Million; and 60.18 MT of

Animal Products exported that also brought in US$ 59 Million. .

As for the implementation of post-harvest program, 96 drying facilities were

completed while other construction works are in progress across the country.

b) Trade and industry

29. The following are key achievements registered by the trade and industry

sector:

In order to increase the competitiveness of domestic industries, the

construction of basic infrastructures in Bugesera industrial park was estimated

at 70% and the construction of the Marram roads in Rwamagana Industrial

park was completed at 78%.

In order to promote the cross border trade, the Cross border markets of

Rubavu, Rusizi , Karongi and Cyanika are operational and whereas

construction of Nyamasheke market is currently estimated at 45%.

Industries have been facilitated to import raw materials through the exemption

of VAT on raw materials.

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c) Energy sector

30. The energy sector focused on increasing access to electricity, expansion of

electricity transmission networks and electricity generation. The following are

the key achievements:

With regards to increasing access to electricity from 52% to 56% by end June

2020; 118,071 Households were connected to the National electricity grid,

333 productive use areas were connected; 19,351 households were connected

to off grid electricity.

In order to improve the transmission and distribution capabilities and

availability of the network, 79.3 km of 220kV Mamba-Rwabusoro-Rilima and

110kV Bugesera-Gahanga Transmission Line and associated substation were

constructed and the overall projects progress was at 96.5%.The construction

of 119km of 220kV Single circuit Rusumo-Bugesera-Shango Transmission

Line and associated substation was at 50% .

In order to increase electricity generation installed capacity from 224.58 MW

to 227.58MW, for 80 MW Hakan Peat-to-Power in Gisagara district is being

completed; 80 MW Rusumo Hydro Power Project to supply electricity in

Rwanda,Burundi and Tanzania was estimated at 62%.

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d) Water and Sanitation Sector

31. The following are key achievements in Water & Sanitation sector:

In order to increase daily water production capacity from 262,660 to 317,660

m3, the construction of Gihira II WTP in Rubavu Town (15,000m3/day) was

at 70.3% as planned; Kanzenze WTP (40,000m3/day) to increase water

production in Kigali and Bugesera was at 84.4%.

In order to ensure safe, reliable and affordable water supply services,

distribution systems were constructed in rural areas to serve 124,241 people

and 127km under Gicumbi WASH Program was completed. Works Ruhunde

- Rushara Water supply system (Burera district) were also completed, while

the construction of Rwamagana Industrial park & extension to Ntunga Water

supply system (10Km) works were at 85% as planned.

The construction of 107km Muyaga-Hakan Peat power plant-Kibilizi water

supply system in Gisagara district was completed;

The 17.8km water supply system from Mageragere to Nyarurenzi in

Nyarugenge district was completed;26.5km Nyabizi- Butaro-Kivuye water

supply system in Burera district was completed;

The 60km of Gihengeri-Ngarama-Kabarore water supply system in Gatsibo

district was also completed

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e) Transport Sector

32. The following are key achievements realized by the transport sector:

Regarding the policy to improve the Quality of road network through the

rehabilitation program, 262 km of various national paved roads were

rehabilitated as follows; Huye-Kitabi (53km) and Kagitumba-Gabiro (57km)

were completed while Kayonza-Rusumo road (92km) project is being

completed.

With regard to upgrading of 392.34 km of National Paved Roads, the overall

progress was as follows;

The construction of Kivu Belt Lot 7 Gisiza-Rubavu road was completed

while additional works at this road that include 4.1km from Bralirwa to

Burushya, 6.2km from Bralirwa to Rubavu, 4.5km to Methane Gas plant,

plus 4.2km to Murunda Hospital and Rubavu-Gisiza road and it’s street

lights are at 60.3%;

Base-Rukomo road (51.54km) was completed,

Upgrading of Nyagatare-Rukomo road (73km) was at 55.88% while the

Upgrading of Huye-Kibeho-Ngoma road (66km) was at 37.49%.

Regarding the maintenance of National unpaved roads & Bridges,

Rubagabaga Bridge was maintained at 82%, Satinsyi Bridge at 82% ,

Kabuhanga-Kinigi road was completed whereas Mukunguri-Rugobagoba

road overall physical progress was at 86.3%.

With regard to the maintenance of national paved roads and road asset

preserved were at different stages of completion: Kigali-Huye-Akanyaru road

was at 99%, Kigali-Musanze road was at 75.3% and Nyakinama -Musanze-

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Cyanika-Musanze-Rubavu road was at 96%. Kigali- Kayonza road was at

96% as planned, and Muhanga-Karongi road was at 77.5%,Rusizi-Bugarama-

Ruhwa was at 85%, 98km of Muhanga-Ngororero-Mukamira road was at

96%, while Crete Congo- Nil-Ntendezi road was completed.

Regarding the construction of 13Km of urban roads in City of Kigali and

other secondary Cities, the overall physical progress of the construction of

Sonatube -Gahanga-Akagera road was at 46%.

In line with Improving and Sustaining Air Transport Infrastructure, expansion

of Kigali International Airport South Apron overall project progress was at

86% and extension of KIA Arrival area (ground floor) was at 70%.

Construction of a road connecting the south apron to the main apron at KIA

was completed at 71% and construction of Rubavu Airport Perimeter fence

overall project was at 57%. The construction of the New Bugesera

International Airport was completed at 35%.

f) Urbanization and Human Settlement Sector

33. The following are key achievements in urbanization and human settlement

sector:

In line with the development of Integrated Development Programme (IDP) to

remodel human settlement planning and coordination at the borders of

Nyagatare, Gicumbi, Burera & Nyaruguru. The construction works are at the

following stage: construction phase II in Nyagatare at Kaborogota works were

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at 91%, while at the existing site of Mukato in Nyaruguru, works were at

75%, whereas in Gicumbi at the existing site of Kagugo, works were at 93%.

Regarding productive urban and rural settlements with a cultural identity, 357

Households were relocated from High risk zones.

The construction of National Archives Building overall progress was at 69%.

g) Education Sector

34. The following are key achievements in Education sector:

In order to enhance quality learning outcomes and relevance of education at

all levels through provision of textbooks, a total of 1,571,762 English and

Mathematics textbooks of P1 to P6 were printed and distributed to schools in

Kigali city and the districts of the eastern province and the southern province.

In addition to the above, 1,528 laptops were procured for identified secondary

schools.

With regards to increasing access to education through construction of

modern infrastructure at all levels, 998 Single classrooms and 1,084 latrines

have been completed. In addition to the construction of new classrooms, 900

classrooms were rehabilitated where progress stands at 70%.

To widen access to quality TVET trainings, construction works for Muhanga

TVET School was at 99%, Hospitality Management Institute at 82% and

IPRC Ngoma at 93%,. The construction of Nyabihu and Rutongo TVET

schools were completed.

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h) Health Sector

35. The following are key achievements registered by the Health sector:

As a measure of strengthening the prevention and control of malaria

vector, Indoor Residual Spraying activities were conducted in districts

with high malaria burden namely; Kirehe, Nyagatare, Ruhango, Kamonyi,

Huye, Nyanza, Gisagara, Ngoma, Bugesera and Rusizi whereby 904,512

structures were sprayed in total.

In order to reduce the burden of non-communicable diseases, health care

providers from 155 health centres were trained on Non-Communicable

Diseases management and Community Checkup, in addition to that 21%

of eligible Rwandan population (aged 35 and above for women, 40 years

and above for Men) were screened through NCDs community check-up.

To improve Geographical accessibility to health services, on-going

construction of several health infrastructure facilities continued and their

physical progress were at different stages of completion. The construction

works for Nyarugenge District Hospital was estimated at 93%,

construction works for Munini District Hospital was estimated at 60.6%,

Gatunda District Hospital is being finalised, Nyabikenke District Hospital

stood at 65% whereas construction of the Research Centre against

digestive Cancer stood at 8.6% and rehabilitation of Kiziguro hospital

estimated at 92%. The Upgrading of Rwanda Military Hospital is in

progress.

To strengthen the provision of basic health care services, a total of 915

Health Posts were completed of which 857 posts are operational.

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i) Justice Sector

36. The following are key achievements in Justice sector:

In line with development of detention facilities, overall activities at

Mageragere prison were executed at 68%, Rubavu prison was completed,

Nyamagabe prison at 87.5% while RCS Training School was at 92%.

Concerning enhancing RCS capacity and improving productivity, a total of

Frw 205,111,708 was generated.

To ensure the quality of justice services the Integrated Electronic Case

Management System were implemented.

j) Social Protection Sector

37. The following are key achievements in Social Protection sector:

In line with ensuring social security and income support programs, a total of

203,665 eligible households benefited from expanded Public Works (ePW) in

416 sectors. In addition, 116,240 eligible households benefited from direct

support (DS).

In order to increase access to financial services to vulnerable people, 66,291

benefited from financial services (FS) through VUP financial service loans

provided.

In line with Girinka Program, 19,500 poor families benefited from this

program, 7,742 children below 5 years of age with acute malnutrition were

supported under a milk support program. In addition, a total of 102,141

children and 44,731 pregnant and lactating women received Fortified

Blended Food (FBF).

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With regards to human security issues, a total number of 6,109 houses were

constructed for vulnerable Households under category 1 of Ubudehe, 9,209

houses in poor conditions were rehabilitated and 14,759 latrines were

constructed while 67,626 latrines were rehabilitated.

In line with disaster response and recovery interventions, 5,034 Households

were provided with iron sheets, 8,686 Households were provided with food

items while 3,902 Households were provided with basic need items.

k) Environment protection sector

38. In the environment protection sector, the following were the main key

achievements;

In order to increase land under agroforestry, 13,523 ha of new forests have

been planted countrywide among which 492,310 Fruit trees have been

distributed and planted countrywide and 3,407 hectares of new forests

were planted.

D. MEDIUM TERM ECONOMIC POLICIES





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39. After updates on the domestic economic performance and the implementation

of 2019/20 budget and key achievements registered, this section focuses on

the Government’s macroeconomic objectives and policies for 2020 and in a

medium term.

The Corona Virus Pandemic strongly hit world economies with no exception.

In Rwanda, the government embarked on the lockdown and limiting free

movement as a way to avoid the quick spread of the virus from the third week

of march this year. This stopped the virus from spreading across the country,

strong cross border measures were put in place, public awareness about the

spread of the virus, purchase of preventive kits, and treating the infected,

tracking of those that came across infected and continuous testing were also

emphasized to fight against the spread.

40. As a result of this pandemic, economic activities were impacted due to the

world wide lockdown.

41. The Government put in place strategies to boost the economy; and these

include;

Stop the spread of COVID-19 and strengthening the health sector facilities,

(Provision of infrastructure, equipment, and developing human resource

for health and use of ICT)

Provision of social support to citizens impacted by the pandemic and the

vulnerable categories.

Improving agriculture productivity in order to ensure food security during

periods of shocks.

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Fast track implementation of job creation projects to increase their

purchasing power for industrial products and widen industrial products

market.

Establishment of the recovery fund to support companies affected by

COVID 19. This fund started on 8th June 2020 with initial capital of RWF

100 million from the national treasury as we continue to mobilize other

stakeholders. MTN has already injected in RWF 100 million.

Close follow up on post COVID strategies to enhance economic recovery.

42. The government has also taken on national economic policies and strategies

including the budget, (Fiscal and Monetary policies).

In the fiscal policy: it was realized that, the pandemic will negatively

affect domestic revenue generation, including the tax and nontax

revenues since economic activities were negatively affected. The

domestic revenues are projected to reduce by RWF 556 billion in

2019/2020 and 2020/2021 representing 2.8% of the total GDP of every

year. Though the domestic revenues are projected to decrease, measure

to combat the impact of the pandemic will require increasing the

expenditure by RWF 882 billion in these two years 2019/2020 and

2020/2021. In this regard the government has opted to raise both

domestic and external borrowing to fiancé the deficit but keeping the

national debt burden lower and in line with the Medium-Term Debt

Strategy;

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The Monetary Policy: to avoid liquidity issues in banks as a result of

COVID 19, mostly due to non-performing loans or delays in loan

repayment, contract revision for clients affected by the pandemic, the

National Bank of Rwanda established a recovery fund of about RWF 50

billion to offer to banks. BNR again from 1 April, reduced the reserve

ratio from 5% to 4%, this will enable banks to remain with about RWF

23 billion to give out. The National Bank of Rwanda also requested banks

to revise contracts of people who were affected by the pandemic to ease

their repayment burden.

E. THE BUDGET FOR FISCAL YEAR 2020/2021





43. In line with the highlights of our medium term macro-economic policies, I

would like to present to you the components of the medium term fiscal

objectives and the 2020/2021 budget with a major focus on prioritised areas.

44. As a measure of mitigating economic and social consequences of the COVID-

19, the budget for 2020/2021 will focus on the government economic recovery

plan to maintain the economic growth trend of the pre-COVID-19 period and

in line with the National Strategy for Transformation 2017-2024 (NST1). The

following are the key priorities considered:

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Strengthening the Health System by Increasing accessibility to quality health

services for all, constructing and equipping health facilities, developing

Human Resources for Health, and modernizing health management systems;

Increasing agriculture and livestock productivity through the use of improved

agriculture inputs and ensuring vaccination and artificial insemination

services; extending the irrigated land and increasing the production of export

crops, strengthening agriculture value chains, and promoting agriculture

insurance.

Strengthening Social Protection programs by scaling up their coverage,

especially the Public works program to increase the employment of poor

households in VUP classic Public Works and expanded Public Works as well

as addressing human security issues.

Promote employment through investment in public infrastructures, such as

school construction program to reduce the pupil-classroom ratio, water and

sanitation projects, road construction projects, and energy projects.

To support promote Micro, Small, Medium and Large Enterprises affected by

COVID-19 to recover and boost their business through the Economic

Recovery Fund in the National Bank of Rwanda.

Continue to support Made in Rwanda Policy to reduce trade deficit and to

build economic resilience.

Promoting digital infrastructure and digital technologies to improve service

delivery and to develop a smart society;

Improving access to quality education through construction and rehabilitation

of classrooms to phase out the overcrowding as well as reducing the long

distance made by pupils to reach schools; improving English proficiency of

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teachers and students; promoting Science, Technology, Engineering and

Mathematics (STEM) across all levels of Education; construction of TVET

infrastructures and expanding school feeding program.

Continue the eradication of malnutrition and stunting among children

Strengthen disaster preparedness and management

45. After giving highlights of key priorities considered in next year’s budget,

allow me to present the budget for 2020/2021 and in the medium term.

46. The budget envelope for fiscal year 2020/2021 is FRW 3,245.7 billion with

an increase of FRW 228.6 billion represented by 7.5% compared to the revised

Budget of FRW 3,017.1 billion for fiscal year 2019/2020.

47. Domestic resources including domestic borrowing are FRW 1,962.8 billion,

which is 60.5 % of the total budget for the fiscal year 2020/2021. External

grants are FRW 492.5 Billion, which is 15.2 % of the total budget while

external loans total to FRW 783.4 billion, which is 24.1 %of the total budget.

48. The total domestic resources and loans combined account for 84.6 % of the

entire budget of 2020/2021 fiscal year, which is a good indication towards our

objective of self-reliance.





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49. After giving highlights of key sources of funds for the 2020/2021 budget,

allow me to present the expenditure policies.

50. Regarding the expenditure policies for 2020/2021 fiscal year, a total amount

of FRW 1,583.0 billion were allocated on recurrent expenditures represented

by 48.8% of the total budget which is FRW 34.4 billion higher than the FRW

1,548.6 Billion in the 2019/2020 revised budget.

51. In the case of capital spending, an amount of FRW 1,298.5 billion represented

by 40 % of the total budget. This amount is FRW 142.3 billion higher than

the FRW 1,156.2 billion estimated in 2019/2020 revised budget. The

domestically financed portion is FRW 703.4 billion while the foreign

financed portion is FRW 595.1 billion representing 18.3 % per cent of total

budget.

52. Net Lending outlays are FRW 306.5 billion represented by 9.4 % of the total

budget, is showing an increase of FRW 49.3 billion compared to FRW 257.2

billion the 2019/2020 revised budget. This increase was mainly due to the

inclusion of funds for business support to cater for the consequences caused

by COVID-19 pandemic, expansion of Rwandair, recapitalization of BRD and

others.

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53. The priorities for 2020/2021 fiscal year were based on their contribution

towards the achievement of strategic objectives as reflected in the National

Strategy for Transformation which is a government strategy developed as an

implementation instrument the new Country’s long term plan of Vision 2050

to achieve the middle income status by ensuring high standards of living for

all Rwandans and other priorities under COVID-19 economic recovery plan.

54. Ministerial planning and budget consultations were conducted to agree on key

priority arrears to be considered in 2020/2021 fiscal year and in medium term.

The resource allocation was based on the three pillars of National Strategy for

Transformation:

a) Economic Transformation Pillar

55. The overarching objective of the Economic Transformation pillar is to

accelerate inclusive economic growth and development founded on the

Private Sector, knowledge based economy and Rwanda’s Natural Resources.

This pillar was allocated FRW 1,802.8 billion of the total budget that makes

55.5% of the total budget for 2020/2021. The main interventions planned

under this pillar include:

56. Job Creation and Entrepreneurship promotion was allocated Frw 16.2

Billion will be achieved through the following initiatives:

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Creating 205,500 decent and productive jobs though implementation of public

projects, NEP interventions and private investments with potential of job

creation Provision of startup tool kits to 7,560 TVET graduates for self-

employment

Providing modern equipment for Integrated Craft Production Centre (ICPCs)

57. Promotion of private sector and financial sector development will be

achieved through the following initiatives:

Support micro, small and medium enterprises to access advisory services and

finance;

Support private Enterprises affected by COVID-19 through the Economic

Recovery Fund

Continue to mobilize Rwandans to save and invest in Ejo Heza;

Develop the agriculture development fund to support farmers to access

Financial institutions;

Automate Umurenge SACCOs, District SACCOs and e-banking of

Cooperative banks,

Promotion of e-payment and digital financial services in partnership with the

private sector;

Conduct trainings with micro, small and medium enterprises as well as

cooperatives on e-commerce skills.

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58. Promoting ‘Made in Rwanda’ policy was allocated Frw 7 billion and this

will be achieved through:

HACCP and S-Mark certification of 125 products and issuance of MIR Logo

to Made in Rwanda products,

Support 20 selected industries to acquire new technologies.

Strengthening value Chain and market linkages among key value chains

59. Development of trade related infrastructure by;

Constructing and operationalizing different Cross Border markets, develop

basic infrastructures in industrial parks and Continue the expropriation of

Gikondo industrial park. This was allocated Frw 18.9 Billion

60. Promotion of Traditional; Non-Traditional exports and facilitate six exports

firms to access finance through the Export Growth Fund (EGF) and enhance

trade competitiveness through e-Commerce. This was allocated Frw 17.7

billion.

61. Knowledge based economy interventions includes:

Implement the National Research Agenda and National Research and

Innovation Fund strategic framework;

Develop a Centralized model of funding Research and Innovation;

Support the Kigali Innovation City Corporation to attract Rwandans and

foreigners with talents for innovation;

Train 100 software developers through Andela Project

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62. Scaling up generation of electricity for socio-economic transformation were

allocated Frw 122.7 billion and the following are the key projects:

construction of Mamba-Rwabusoro-Rilima transmission lines to evacuate the

80 MW of electricity that will be generated by Hakan Peat-Power Project in

Gisagara district;

Rwanda-Burundi transmission line (Kigoma and Ngozi);

Rusumo-Bugesera-Shango Transmission lines will also be constructed;

Continuing the electricity connectivity to 240 productive use areas including

markets and schools among others;

Connecting 118,657 new households to on-grid electricity and 50,000

households to on-grid electricity.

63. Accelerating transport infrastructure were allocated Frw 243.3 billion and

the following are the key strategic interventions:

Construction, rehabilitation and upgrade of national roads including

Kagitumba-Shinga –Gasoro (66km) at to be at 80% and Huye-Kibeho-

Ngoma /Munini (66km) to be at 75%

Development and maintenance of feeder roads of 450 km (estimated at 60%)

in Gatsibo,Nyagatare,Nyabihu,Rutsiro,Gakenke and Nyaruguru and the

demarcation of railway corridors will continue ;

Emergency Mobile Bridge will be acquired while the Rubagabaga and

Satinskyi Bridge will be constructed

Construction of four maritime ports at Lake KIVU incuding

Rusizi,Rubavu,Karongi and Nkora

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64. Increasing agriculture productivity were allocated Frw 122.4 billion and the

following are the key interventions:

Continuing the use of improved agriculture inputs such as inorganic fertilizers

and improved seeds and implement the crop intensification project

Development of agricultural infrastructure to combat soil erosion through the

construction of radical terraces and progressive terraces;

Development of irrigation facilities including marshland and hillside schemes

as well as Small Scale Irrigation Technology to increase crops resilience to

climate change;the prioritized irrigation projects include Gako (18,00 ha)

project in Bugesera district;Gabiro Agri-business project phase 1 (5,000

ha),Mpanga marshland (659 ha),rehabilitation of agriculture infrastructures

destroyed by disastersinRwamagana, Rurambi, Bugarama, Umuvumba

,Gatuna and Kamiranzovu.

Promotion of livestock development through mass insemination as well as

vaccination against various animal diseases;

Strengthening cash crops production for export through increased production

of coffee and tea;

Reduction of post-harvest losses through establishing new drying shelters and

storage facilities.

Strengthening the national strategic grain reserve whereby 7,000 tons of maize

and 3,000 tons of beans will be stored using the national budget;

Agriculture insurance scheme will reach 20,000 farmers; Insurance will be

provided to 57,500 domestic animals (cows, pork and chickens) and a total of

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13,647 hectares of maize, rice, cassava, soy, pepper and banana plantations

will be insured.

65. Promoting urbanization through the implementation of urban

development project in secondary cities, complete the revision of Kigali City

master plan and secondary cities as well as district cities master plan in line

with the national land use master plan and support the affordable housing

projects to access basic infrastructure. These priorities were allocated Frw

47.9 billion

66. Sustainable Management of Natural Resources were allocated Frw 49.6

billion. The key activities and projects include:

Privatization of public forest management to reach 46 % from 36 %;

Increasing forestry coverage by planting 24,869 hectares of agroforestry;

79,784 hectares of fruits trees and natural forest;

Implementation of floods control measures in the volcano area

construction of Sebeya flood control dyke and new Muhazi dyke for water

storage;

67. Disaster Management interventions was allocated Frw 27.4 billion and will

include:

Installation of new lightning protection systems in Rutsiro district;

Developing the Early Warning Systems for drought and landslides;

Continue to assisting people affected by disasters.

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b) Social Transformation Pillar

68. The overarching goal for the Social Transformation Pillar is to develop

Rwandans into a capable and skilled people with quality standards of living

and a stable and secure society. This pillar was allocated FRW 960.4 billion

which is equal to 29.6 % of the total budget for 2020/2021. Key priority

interventions and projects allocated the budget under this pillar include the

following:

69. Scaling up coverage of programs designed to support vulnerable households

were allocated Frw 129.2 billion and the following are the priorities:

Continue to support extremely poor households with VUP direct support and

Nutrition Sensitive Direct Support;

Increase the number of employed poor households through VUP classic

Public Works and expanded Public Works;

Roll out of the revision of Ubudehe categorization and development of social

registry to improve efficiency in coordination of social protection programs;

Addressing human security issues in districts by constructing 541 houses for

needy Genocide Survivors and construction as well as rehabilitation of 44,822

houses for vulnerable households.

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70. Reduction of all forms of malnutrition was allocated FRW 30.5 billion and

will be achieved through;

Distribution of Fortified Blended Food to children (of 6-23 months),

pregnant and lactating women with malnutrition.

Increasing the number of eligible children receiving milk under One cup of

milk per child program in schools;

Provision of milk to children under five years with moderate malnutrition;

Train 2,084 community health Workers (CHWs) at village level on Children

growth monitoring and optimal development of children;

Train education officers and teachers trained in pre-primary nutrition

guidelines.

71. Improving access and quality of health services were allocated Frw 261.1

billion and the following are the key priorities:

Continuing the construction of health facilities countrywide including

hospitals, health centers and health posts;

Promoting maternal and child health services by increasing the percentage of

attendance to standards antenatal care visits and increasing birth deliveries in

health facilities;

Reinforcing the screening of Non Communicable Diseases through scaling up

NCDs community check-up for eligible people;

Continue ongoing construction projects of health facilities such as;

Nyabikenke Hospital Munini hospital, Research and Training Institute

Against Digestive Cancer (IRCAD), and mental health day care center;

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Sustaining the quality services through the treatment of Tuberculosis, Malaria,

HIV/AIDS for all;

Continue the campaign on coronavirus containment measures to prevent the

spread of the virus.

72. Improving access and quality of education were allocated Frw 492.0 billion

and the following are the key strategic interventions:

Reducing overcrowding in schools and long distances to schools by constructing

classrooms and developing infrastructure at all levels of education (pre-primary,

primary, secondary, TVET, tertiary).

Scaling up the school feeding program in schools;

Scale up the use of ICT in learning;

Improving English proficiency of teachers and students;

Promoting STEM across all levels of Education and continue to support

operationalization of Centres of Excellence (CoE).

73. Scaling up access to clean water and sanitation were allocated Frw 52

billion and the following are the key priorities:

Completion of Kanzenze water treatment plant in Bugesera District;

Finalizing construction of Gihira II water treatment plant in Rubavu District;

Extension and rehabilitation of water supply systems in urban and rural areas

to serve new people and connect new productive areas;

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Construction of modern landfills in Kigali and operationalization of the

completed ones.

74. Strengthen the promotion of gender and the family was allocated Frw 2

billion and will be achieved through:

The prevention of sexual violence by couples through their training

using the Indashyikirwa model;

Promotion of girl’s education at all levels;

Train businesswomen for self-development and access to finance

through financial institutions.





c) Transformational Governance Pillar

75. The overarching goal for the Transformational Governance Pillar is to

consolidate Good Governance and Justice as building blocks for equitable and

sustainable National Development. This pillar has been allocated FRW

482.6.3 billion, which makes 14.9% of the total budget for 2020/2021. The

following are key priorities:

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76. Promoting quality service delivery in public, private and CSO was allocated

Frw 57.1 billion: This will be achieved by;

Expanding services delivered online through Irembo, conducting

Nk’Uwikorera Campaign, online service delivery assessments and

connecting public institutions (Cells and Health Posts) to Internet. More

than 100 services will be fully digitized to end-to-end system and 441 new

Service Access points will be established to ease access to online service

from 349 service access points;

Operationalization of automated civil registration (for births and deaths) at

the place of events (health facilities, sectors and cells etc.).

Promoting innovation and increasing digital literacy for all through

implementing the basic digital literacy among citizens through the Digital

Ambassadors Program (DAP) and promoting smart device penetration by

distributing laptops.

Enhancing Public Finance Management through implementing Auditor

General’s recommendations;

Preparing and conducting 2021 elections in local government and elections

for special councils from village level up to the national level.

Promoting media sector development and ensuring access to quality

information through maintaining the coverage of Radio and Television

signals national wide and supporting media associations.

77. Strengthening Justice, Law and Order and ensuring safety and security of

citizens and property was allocated FRW 316.1 billion. The following are the

key priorities;

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Increase the cases handled by MAJ through reinforcing MAJs and

mediators’ committees;

Construction of Bugesera, Gasabo,Rulindo and Muhanga primary

courts;

Intensifying the fight against genocide ideology in Rwanda and

anywhere in the world;

Digitalization and Conservation of Gacaca Records Indexing

and online access,

Rehabilitation of Rebero, Nyange, Murambi and Ntarama genocide

memorial sites,





78. After presenting the key intervention areas, allow me to highlight the key

projects in 2020/2021 fiscal year under each pillar of NST1:

Under Economic Transformation Pillar: the following are key projects:

Connecting New Households connected to the Grid – EARP (Electricity

Access Rollout Program): Billion: FRW 34.2 billion

Construction of Kigoma/Rwanda-Ngozi/Burundi transmission line: FRW

9.9. billion

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Construction of Rwanda –DRC Interconnection Substations: FRW 5.5 billion

Construction Double Circuit of Mamba-Rwabusoro-Rilima and associated

substations: FRW 13.3 billion

Development of 60 million Liters for Government of Rwanda fuel strategic

reserves at RUSORORO: FRW 12.1 billion

Construction of single circuit Rusumo-Bugesera-Shango: FRW 15.4 billion

Reallocation of Gikondo industrial park: FRW 3 billion

Affordable Housing land/plots serviced with road grading works to facilitate

Investment in affordable houses in Kigali: FRW 2 billion

Great Lakes Trade Facilitation Project: FRW 8.6 billion

Development of Fuel Storage facilities: FRW 7.3 billion

Development of Mice Tourism Project: FRW 7.4 billion

Strategic Capacity Building Initiative: FRW 1.5 billion

Strengthening capacities of RDB and private enterprises for job creation

project: FRW 7 billion

Government Funded Modern Irrigation (GFI): FRW 1.3 billion

Kayonza Irrigation and Integrated Watershed management Project: FRW 7

billion

National strategic grain reserves: RWF 2.7 billion

Gako Integrated Beef Project: FRW 4.2 billion

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Rwanda Dairy Development Project: FRW 9.5 billion

Sustainable Agriculture Intensification and Food Security Project: FRW 6.3

billion

Gabiro Agri-Business Hub Project: FRW 33.8 billion

Improving Coffee Production, Productivity and Quality: FRW 1.4 billion

Acquisition of Emergency Mobile Bridges: FRW 3.7 billion

Maintaining Pindura-Bweyeye-Nyungwe belt roads: FRW 7.4 billion

Construction of Rubagabaga- Satinsyi Bridge: FRW 2.3 billion

Feeder Roads Development Project: FRW 31 billion

Rehabilitation Kagitumba-Gabiro road: FRW 10.7 billion

Ngoma-Ramiro Road Upgrading Project: FRW 6.8 billion

Kibugabuga-Shinga-Gasoro road upgrading project: FRW 12.6 billion

Development of Maritime Transport Infrastructures and Services: FRW 16.9

billion

The following are key projects under the Social Transformation Pillar:

Rwanda Sustainable Water Supply and Sanitation Program: FRW 19.3

billion

Improvement of Urban Water Supply: FRW 11.1 billion

Improvement of Sanitation in Urban Areas: FRW 2.0 billion

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Schools Construction Project: FRW 77.8 billion

TVET Schools Infrastructure Development Project: FRW 5 billion

Rwanda Quality Basic Education for Human Capital Development Project:

FRW 106.7 billion

Stunting Prevention and Reduction project: FRW 20.1 billion

Global Fund support to fight against HIV/AIDS, Malaria and Tuberculosis:

FRW 61 billion

Under Transformational Governance Pillar: the following are key projects:

Public CCTV (Closed-Circuit Television) project to strengthen public

security: FRW 6 billion

National Cyber Security project: FRW 4.4 billion

Construction of automated driving license testing center: FRW 3 billion

Strengthening the Capacity of RNP for Effective Service Delivery: FRW 1.9

billion





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F. CONCLUSION

79. In conclusion, allow me to commend on behalf of the government the

parliament for the collaboration shown to us during the budget preparation

process. We appreciate what was done by the parliament in the new approach

to scrutinise the budget framework paper in different clusters in line with the

country’s key policy documents highlighting different priorities including

NST1 and this was done in a short period using online platforms due to

coronavirus outbreak

80. The recommendations provided by the parliament based on its scrutiny were

considered in this 2020/2021 fiscal year budget based on available means and

a significant rationalization was done on recurrent budget to fund gaps on

strategic interventions while others were considered in the medium term. The

saved funds of Frw 187.4 Billion were reallocated to other strategic

interventions with gaps mainly

Agriculture sector were allocated additional Frw 30.1 billion to increase

food crops productivity,

School construction and school feeding program were allocated additional

Frw 89.9 billion

Additional Frw 10 billion were allocated to Health infrastructure and

medical equipment

Disaster management was allocated an additional budget of Frw 15

billion;

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Expropriation and related arrears were allocated additional Frw 9 billion;

Cyber Security and related operations were allocated additional Frw 4.4

billion;

The remaining savings were allocated to strategic interventions in other

sectors.

81. I would also like to highlight that, in line with the operating economic

environment of our country and in particular, the budget for the fiscal year

2020/2021 could be affected by several domestic and external factors. On the

domestic front, our economy’s performance could be affected by bad weather

conditions affecting agriculture production and effects of COVID-19

Pandemic.

On the external side, our economy could be affected by the decrease in global

commodity prices caused by COVID19 pandemic effects among developed

and emerging countries where we export commodities. The government will

continue, to closely monitor these factors and take all the necessary measures

to ensure full implementation of our economic program.

82. I would like to take this opportunity to thank you for the time accorded to me

to present to you on behalf of the Government the draft finance law for the

fiscal year 2020/2021 and hereby request for your approval in a timeframe

prescribed by the law to allow timely implementation.

I THANK YOU!

theme: “stimulating the economy to safeguard livelihoods ... · budget speech financial year...

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