EA countries’ 2016 budgets rise by $5.4b

Saturday May 07 2016

Tanzania has allocated $8.32 billion for various railway projects, with the priority being the standard gauge railway and rehabilitation of old networks. PHOTO | FILE

East Africa’s four largest economies have increased their budget estimates for the next financial year by $5.4 billion.

Tanzania, Kenya, Rwanda and Uganda are seeking to finance capital projects and reduce dependence on donor support.

Midweek, Rwanda’s Finance and Economic Planning minister Claver Gatete, submitted to the country’s parliament the 2016/17 Budget Framework Paper that will see the nation’s budget increase to $2.56 billion.

“We will be looking at increasing revenue collections to finance this budget,” said Mr Gatete.

Rwanda has revised upwards its revenue collection target to $1.55 billion, which is higher than the $1.38 billion collected in the 2015/16 budget. The country will also be looking at extra financial support from the International Monetary Fund to balance its trade despite this year’s budget reducing its dependence on donor aid.

“In the 2016/17 budget we have reduced our grants by $12.36 million to $480.9 million,” Mr Gatete told lawmakers.


Rwanda will also see a slight increase in its development expenditure to $1.01 billion as it seeks to promote its infrastructure projects on roads and energy.

The government will also use $66 million of this development expenditure on its import substitution programme that will see intensified efforts in sprucing up the tea, coffee, textiles, horticultural and minerals value addition sector.

Mr Gatete said that the country’s recurrent expenditure will rise from $1.17 billion to $1.27 billion in the new financial year.

In Tanzania, Finance and Planning Minister Philip Mpango said revenue collection targets would be raised by 14 per cent while foreign borrowing which currently stands at $1.54 billion, will be reduced three per cent.

“We have increased our allocations for infrastructure spending to $5.27 billion while our recurrent expenditure will be $7.89 billion. We expect that 77.8 per cent of the development to come from local sources,” said Dr Mpango.

The rise in the development expenditure is in line with President John Magufuli’s election pledges on improving the region’s second largest economy’s infrastructure.

According to Dr Mpango, Tanzania will in the 2016/17 financial year generate $6.29 billion in tax, with the non-tax sources raising $755.5 million.

“In terms of borrowing, we will raise $1.47 billion from the domestic market through Treasury bills, while we expect to use $1.23 billion of this amount to settle the bond maturities within the same financial year. External borrowing that will include loans and grants is projected at $939.7 million, which is a nine per cent reduction,” said Dr Mpango.

The framework shows that Tanzania has allocated $8.32 billion for its railway projects, prioritising the standard gauge railway and rehabilitation of its old railways networks. It has also allocated finding for the construction of new ports and rehabilitation of some of its existing ports.

For instance $8 billion has been allocated for compensation that will see the construction of Mbegani Port in Bagamoyo and $892 million for the feasibility studies for a new port at Mwambani in Tanga. 

Kenya will face an uphill task in trying to plug in a third of its budget through debt. In its budget estimates, Kenya’s National Treasury said that the budget has a deficit of $6.89 billion of which it expects to finance through project loans, commercial financing, domestic borrowing and donor  funds.

“We plan to spend $8.09 billion on development, of which we will fund mainly through external borrowing to the tune of $4.1 billion. The domestic borrowing contributions to this will be at $3.98 billion,” National Treasury Cabinet secretary Henry Rotich said.

Kenya’s development spending has not been growing in tandem with the infrastructure needs, with the country currently having more than 1,000 ongoing projects that would need $30 billion to have them completed by 2025.

Kenya will also see $8.5 billion of its $22 billion budget go into recurrent expenditure even as it seeks to complete the various infrastructure projects promised by the current administration, which is seeking re-election mid next year.

In Uganda, Finance Minister Matia Kasaija said that the $7.7 billion 2016/17 budget will enable government to start delivering part of its pre-election manifestos.

“We have allocated $1.06 billion to the Ministry of Works and Transport which will push the infrastructure agenda. The education sector will receive $649.7 million, education $679.3 million while the health sector will get $413.5 million,” said Mr Kasaija.

Interestingly, agriculture, which is one of the largest contributors to Uganda’s GDP will get $207 million in the coming financial year, a marginal increase of $2.9 million from the 2015/16 allocation, and off the promised $296 million during the election period.

Of this $96.2 million will go into the provision of agricultural inputs such fertilisers, pesticides and seedlings.