RWANDA FISCAL TRENDS AND PROSPECTS Elias BAINGANA National

RWANDA FISCAL TRENDS AND PROSPECTS Elias BAINGANA- National Budget

OUTLINE Revenues and Grants Expenditure Deficits Latest and Net Lending and Financing Developments

REVENUES AND GRANTS Revenues and Grants (as a percentage of GDP) 30. 0 25. 0 20. 0 15. 0 10. 0 5. 0 2001 2002 2003 2004 Total Revenue and Grants 2005 2006 Total Revenue 2007 2008 2009 Mini 2009/10 B. Total Grants Total Revenues & Grants (annual growth rate) 200. 0 150. 0 100. 0 50. 0 2001/00 2002/01 2003/02 2004/03 2005/04 2006/05 2007/06 2008/07 -50. 0 -100. 0 Total Revenue and Grants Total Revenue Total Grants 2009 -10/09 Mini/08 Mini

REVENUES AND GRANTS (CONT) q. Consistent growth in domestic revenues mainly explained by: • Increased tax payers compliance • Increased efficiency in revenue collection • Increased monetization of the economy • Reduction of cost of doing business q. Foreign grants fluctuated around 10% of GDP.

EXPENDITURES Expenditures (as a percentage of GDP) 30. 0 25. 0 20. 0 15. 0 10. 0 5. 0 2001 2002 2003 Total Expenditure 2004 2005 Recurrent Expenditures 200. 0 2006 2007 2008 2009 Mini 2009/10 B. Development Expenditures (annual growth rate) 150. 0 100. 0 50. 0 M 09 09 -1 0/ M 20 09 20 -100. 0 Total Expenditure Recurrent expenditures in i 8 in i/0 07 8/ 20 0 06 7/ 20 0 05 6/ 20 0 04 5/ 20 0 03 20 0 4/ 02 3/ 01 2/ 20 0 -50. 0 20 0 1/ 00 0. 0 Development expenditures

EXPENDITURES (CONT) • Expenditures grew steadily over the time, with a surge in expenditures with the start of the EDPRS. • Capital expenditures growing faster reflecting Go. R commitment to fast track poverty reduction. • Increasing aid flows in the past contributed to scaling up spending on priority expenditures, mainly capital expenditures.

DEFICIT AND FINANCING 4. 00 2. 00 - 4. 00 - 6. 00 - 8. 00 - 10. 00 - 12. 00 - 14. 00 - 16. 00 Deficit (as a percentage of GDP) 2000 2001 2002 2003 2004 Deficit Including Grants 8. 00 2005 2006 2007 2008 2009 Mini 2009/10 B. Deficit Excluding Grants Financing (as a percentage of GDP) 6. 00 4. 00 2000 2001 2002 2003 2004 2005 2006 2007 - 2. 00 - 4. 00 - 6. 00 - 8. 00 Financing Foreign financing Domestic financing 2008 2009 Mini 2009/10 B.

DEFICIT AND FINANCING (CONT) • Budget deficit gradually expanding with the increased use of domestic financing; • Financing from external source gradually reducing, concessional loans mainly in external financing to keep in line with debt sustainability;

OVERALL FISCAL TRENDS 2, 000 Total Revenues&Grants, Expenditures, Deficit and Financing (in billion Rw. F) 1, 500 1, 000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mini B. 2009/10 -500 -1, 000 Total Revenue and Grants Total Expenditure Deficit After Grants Deficit Before Grants Financing

LATEST DEVELOPMENTS Current Challenges Future Prospects Negative implications of the global financial crisis on the fiscal policy; Big Go. R projects in pipeline expected to bear fruits in the medium term; Effects of the implementation of the EAC CET and use of FOB instead of CIF for taxation affecting trade taxes; New IMF facilities likely to provide opportunities for flexible financing; Prospects for increased FDIs likely to increase the tax base;