The Minister of Finance and Economic Planning, yesterday, said Government would increase domestic borrowing to mitigate the impact of delays in disbursement of funds to the national budget by development partners.
This comes amidst announcements by some developing partners to delay part of their funding over allegations that Rwanda was supporting M23, a rebel group in the Democratic Republic of Congo, allegations Rwanda has denied.
“It is a problem of cash flow and we will manage it through domestic borrowing and delaying some programmes,” said Minister John Rwangombwa.
The UK government said it was delaying disbursement of £16m ($25m) in budget support due this month ‘while it considered whether aid conditions had been met.’
“But from all indications, UK is willing to arrive at an understanding and hopefully the disbursement will be done by end of August,” Rwangombwa said, adding that the magnitude of the donors’ decision is not yet determined.
Germany suspended US$26 m to Rwanda’s budget planned from this year through 2015, while the Netherlands delayed US$6.15m also in budget support.
According to Rwangombwa, Netherlands and Germany were not clear in their decision saying it’s compromising the policy on aid effectiveness.
However, mid this year, the Kingdom of the Netherlands had said that last year, government went through a thorough re-assessment and Rwanda was among the 15 countries selected as long term partners.
“On a policy level, it’s unfortunate that the decision is based on such a report forgetting mutual accountability, predictability and respect between partner states,” he underscored.
Rwanda has been ranked highly by donors among the best performers and eminent partner in aid effectiveness, based on how the government manages the money to realise its set development goals.
Major drivers of aid effectiveness comprise strong public financial management system, the fight against corruption and ownership of the country’s development programmes.
According to the national 2012/13 budget, the country is expected to receive Rwf297 billion from development partners in form of direct budget support compared to Rwf279 billion in 2011/12.
The Government of Rwanda is financing its budget by 52 per cent.
Source: The New Times