Rwanda has projected a GDP growth of 5.2 per cent, compared with 5.9 per cent in 2016, despite a positive economic outlook in the last quarter of 2017.
“The 5.2 per cent is lower than the 6.2 per cent we had anticipated because the economy did not perform well in the first two quarters of the year,” the Minister of Finance and Economic Planning Claver Gatete said.
The Rwandan economy grew by eight per cent in Quarter three of 2017, compared with four per cent in Q2, and 1.7 per cent in Q1.
The country has also revised its 2017/18 budget upwards by $24.5 million, to boost infrastructure development. The budget previously stood at $2.58 billion.
While presenting the amended budget to parliament on Wednesday, Mr Gatete said the government will raise the additional funds through the sale of Treasury bonds and “some of the reserves generated from taxes on petroleum products.”
Part of the money will go to the national carrier RwandAir to reposition it to open routes to the US and China. The government also plans to rescue of Marriott Hotel, which according to the minister “is beset by a huge debt burden.”
According to Mr Gatete, commodity prices are expected to stay on an upward trajectory in 2018, particularly petroleum products and minerals.
The increase in commodity prices was attributed to declining agricultural output in 2016 and at the start of 2017, which raised market prices. Prices began to stabilise at the end of 2017, thanks to improved harvests in the country and the region in general.
“On average, commodity prices in 2017 increased by 4.8 per cent, which is the lowest in the region, compared with our neighbours, and still lower than the EAC threshold of five per cent,” said Mr Gatete.
Global commodity prices rose three per cent by the end of 2017, compared with 2.8 per cent at the end of 2016, due to an increase in the production of petroleum products by 22.3 per cent, compared with 15.6 per cent in the period under review.
Cash in circulation
Broad money (money in circulation) increased by 12.3 per cent at the end of 2017, while banks’ loan books grew by 13.9 per cent. Exports brought in $943.5 million, reflecting a 57.6 per cent increase from $598.7 million in 2016.
The increase in export revenue is attributed to mineral exports which grew by 210 per cent. Mineral export revenues stood at $248 million compared with $80.1 million in 2016.
Coffee production also rose by 9.6 per cent while tea production grew 32.9 per cent, on the back of increased prices on the global market.
According to the Finance Minister, due to the growth in exports and a decline in imports in 2017, Rwanda’s trade deficit reduced by 21.7 per cent to $1.27 billion by the end of 2017, from $ 1.62 billion.
Domestic revenues increased from Rwf1.37 trillion ($1.6 billion) to Rwf1.41 trillion ($1.68 billion) while external revenue in the form of donor support is expected to reduce to Rwf702.6 billion, from Rwf719.5 billion, attributed to deterioration of the franc against the dollar.
The increase in domestic revenue is a result of Treasury bonds sold last year.
The International Monetary Fund says Rwanda’s debt stands at 46 per cent of GDP, warning against further external borrowing. Kigali is now looking at increasing tax revenues.