Presentation Outline 1. Medium Term Fiscal projections 1. The - - PowerPoint PPT Presentation

Presentation Outline

• 1. Medium Term Fiscal projections
• 1. The 2011/12 and Medium Term Budget Policy
• 2. Medium Term Sectoral Allocation
• 3. Key Policy Issues
• 4. Conclusion

Medium Term Fiscal Projections

The medium term fiscal projections have been derived from the macro-

framework that have just been presented.

Domestic Revenues are projected to increase by an average of 0.3% of GDP

in the medium term. Taxes on goods and services will contribute the big in the medium term. Taxes on goods and services will contribute the big share.

Taxes from International Trade will remain at about 1.1% over the medium

term due to the shift of trade flows towards low tariff commodities.

Non-Tax Revenues are projected to remain constant at about 0.7% of GDP in

the medium term although they will increase in nominal terms.

• Budgetary Grants are fluctuating but with an overall declining trend as a

share of GDP.

The Capital Grants decline sharply from 4.8% of GDP in 2010/11 to about

2.5% in the 2013/14. Global Fund numbers decline from 1.4% to 0.1% over the same period. As a result total grants decline by 1.5% of GDP.

Medium Term Fiscal Projections

Medium Term Fiscal Projections

The total expenditure and net lending declines by 4.5% of GDP from

2010/11 to 2013/14, an annual average decline of 1.5% of GDP.

Total recurrent costs are projected to decline marginally as a share of GDP

from 14.9% in 2010/11 to 14.8% in 2013/14. Expenditures on goods and from 14.9% in 2010/11 to 14.8% in 2013/14. Expenditures on goods and services as well as on transfers will continue to increase.

The share of expenditures on domestically financed projects will decline as

a share of GDP from 6.4% in 2010/11 to 5.6% in 2013/14.

Total expenditures on externally financed projects are projected to decline

• ver the medium term by 3.6% with global fund resources declining by 1.3%
• ver the same period. As a result total development expenditure declines.
• ver the same period. As a result total development expenditure declines.

Net lending fluctuates but has an overall declining trend of about 0.1% of

GDP from 0.6% in 2010/11 to 0.5% in 2013/14.

As a result, the overall fiscal deficit is projected to decline by 4.1% of GDP

with significant reductions from net domestic financing.

Medium Term Fiscal Projections

Medium Term Budget Policy

The budget policy for 2011/12 and the medium term is anchored on

progressively increasing the share of resources allocated to investment projects.

This is not only consistent with the policy aspiration of building a base

for reducing reliance on foreign aid but also in tandem with the medium term fiscal projections.

Expenditure rationalization with incentives to re-allocate resources

towards priority programmes will remain a key objective.

Consolidation of on-going programmes and projects and selectively

• Consolidation of on-going programmes and projects and selectively

allocating resources to new projects.

Scaling-up central government transfers to local governments to match

resources to expenditure assignments while minimizing transaction costs to local governments.

Medium Term Sectoral Allocation

Medium Term Sectoral Allocation

The medium term sectoral allocation seek to further accelerate a pro-

poor growth within a sustainable framework. Emphasis has been placed on:

Enhancing the productive capacities to unlock the potential in Enhancing the productive capacities to unlock the potential in

agriculture supply, agri-business and promotion of value addition in exports.

Scaling-up investments in physical infrastructure to create an

enabling environment and act as a catalyst for rural transformation.

Sustaining the momentum in the human development and social

• Sustaining the momentum in the human development and social

sectors to progressively improve the quality of life of the

• population. This cluster registered a shortfall compared to EDPRS

target due to enormous financing needs in the productive capacities and infrastructure sectors.

limiting further growth in good governance and sovereignty

sectors to create savings for high priority areas .

Resource Allocation - Infrastructure

Resource Allocation - Infrastructure

Resource allocation in the medium is gradually declining mainly due to

limited information on projects over the three year time horizon.

The key projects and programmes : The key projects and programmes : Rehabilitation and extension of urban roads as well as rehabilitation of

classified national road networks.

Finalization of detailed engineering design for Isaka-Kigali-Keza-Gitega-

Musongati railway line.

Energy Roll-Out Programme to increase access to power by the rural

population.

• population.

Nyabarongo hydro power station and construction of micro hydro power

stations to augment power supply.

Geothermal resource and peat development project for electricity

generation.

Resource Allocation - Infrastructure

Additional Capacity charge, fuel subsidies and import duties to stabilize

power supply.

Implementation of Biogas Project to substitute for Charcoal and save the

environment. environment.

Rehabilitation of Rwabuye fuel storage facility to increase capacity of fuel

storage facilities and safeguard against fuel shortages and price instability.

Operationalization of optic fibre, deployment of E-Government and

National Data Center

Construction of Kigali Convention Center and strengthening of Rwandair. Eradication of grass thatched houses “Nyakatsi program” and promotion

imidugudu.

• imidugudu.

Borders connectivity project to improve service delivery and doing

business.

Implementation of development plans for cities and towns. Implementation of IDP Model Projects in all provinces and Kigali city.

Resource Allocation – Productive Capacities

• The big increase is mainly due to scaling up of investments in

agricultural supply, agri-business, promotion of SMEs, post harvest handling and VUP Program.

Resource Allocation – Productive Capacities

The main focus for this sector is to enhance productive capacities. The key

projects and programs are:

Irrigation program (incl LWH) to facilitate steady agricultural supply. Scaling up priority crop intensification through increased supply and Scaling up priority crop intensification through increased supply and

distribution of fertilizers and seedlings.

Replenishment of National Strategic Food Reserve. Agricultural Mechanization Programme. Gishwati Land and Water Management One Cow One Family and One Cup of Milk per Child Projects.

• One Cow One Family and One Cup of Milk per Child Projects.

Support to small stock development. Kigali wholesale market for agriculture product. Improving coffee production, productivity and quality.

Resource Allocation – Productive Capacities

Promotion of business services and cooperatives including the

SACCO programme.

Construction of one pilot provincial industrial park. Implementation of the export promotion programme. Systematic Land Registration Project. Protecting the banks and catchment area of Nyabarongo.

• Protecting the banks and catchment area of Nyabarongo.

Support to the Rwanda Bureau of Standards to set up quality

testing laboratories and acquisition of equipment.

Resource Allocation – HD + Social Sectors

Resource Allocation – HD + Social Sectors

The key programs and projects financed under this cluster are: Schools construction, teachers’ salaries, capitation grant, schools

feeding and text books in line with the 9 YBE programme.

TVET and Integrated Polytechnic Regional Centres to promote

vocational training and narrow the skills gap and employment challenges in the domestic market.

Support to UMWALIMU SACCO (Teachers’ cooperative) to improve

the welfare of teachers through loan schemes.

• Support to finance higher education through cost sharing and

development of infrastructure and laboratory equipments.

Implementation of One laptop per child program in primary schools

and enhancement of ICT in secondary schools

Resource Allocation – HD + Social Sectors

Implementation of the new health insurance policy through providing

contribution to indigents to achieve full coverage of health insurance for the population.

Implementation of performance based financing for the health Implementation of performance based financing for the health

personnel and provision of salaries for health workers.

Rehabilitation and expansion of King Faisal Hospital. Completion of Kinihira and Ntongwe District Hospitals. Accreditation of reference hospitals to improve quality of services and

• Accreditation of reference hospitals to improve quality of services and

standards.

Procuring drugs and vaccines for hospitals and health centers and

controlling of infectious diseases.

Acquisition of Health Equipment and District Ambulances.

Resource Allocation – HD + Social Sectors

Implementation of the Social Protection Strategy through

scaling-up of VUP and FARG programmes.

Implementation of the demobilization and reintegration of ex- Implementation of the demobilization and reintegration of ex-

combatants programme.

Rehabilitation and extension of Gitagata Rehabilitation Center. Construction of the environmental museum in Karongi district. Support to National Museum, the Youth Council and the

• Support to National Museum, the Youth Council and the

National Commission for the fight Against Genocide.

Resource Allocation – Governance + Sovereignty

• Growth in the sector is limited to create some savings for the high

priority sectors.

Resource Allocation – Governance + Sovereignty

The key projects and programs under this cluster are:

Support for the functioning of executive and legislative organs.

Support for the functioning of the Rwanda diplomatic

Support for the functioning of the Rwanda diplomatic

missions abroad as well as construction and rehabilitation of buildings for Embassies.

Remuneration for the personnel of Judiciary, defence and

national police.

Access to justice and capacity development for the judicial

institutions.

• institutions.

Implementation of the Public Finance Management Reform

Strategy.

Support to peace keeping operations.

Resource Allocation – Governance + Sovereignty

Transfers to the districts for operating costs (block grant). Debt service and interest payments. Establishment of the Electronic Trading Platform and the

National Investment Trust.

Support for the operations of monetary policy for prudent

fiscal and monetary management. Strengthening of institutional capacities in charge of

• Strengthening of institutional capacities in charge of

internal security.

Strengthen regional integration as well as regional and

international cooperation.

Key Policy Issues

The potential for performance bonus and rewards for

horizontal promotion to cumulate into staff arrears as a result

• f

failure by some institutions to undertake timely performance evaluations remain eminent. performance evaluations remain eminent.

The failure by some institutions to prioritize and abide by

budget appropriated by parliament. Priorities emerging after budget approval should lead to reprioritization.

Unilateral commitment by some agencies to pay subscriptions

fees to regional or international organizations without Cabinet

• fees to regional or international organizations without Cabinet

approval.

These issues present challenges to the 2011/12 budget

implementation.

Conclusion

The Budget Framework for 2011/12 to 2013/14 is build

• n EDPRS foundations and a prudent macroeconomic

framework.

The budget policy for 2011/12 to 2013/14 seeks to

further accelerate a pro-poor growth within a sustainable framework.

The overall resource allocation is broadly consistent with

EDPRS sectoral priorities and takes care of changing conditions.

• conditions.

Both the policy and resource allocation decisions have

benefited from thorough consultations with sector Ministries during budget consultations.

Thank you

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