By David Himbara
General Paul Kagame and his regime live in fantasy land. They tirelessly seek to impress the world that Rwanda is an African success story and development model. The latest big lie is that Rwanda is weaning itself off from foreign aid. This fantasy was floated by the minister of finance who spectacularly claimed in his budget speech that Rwanda is moving towards financial self-reliance:
”Total domestic resources and loans combined account for 85.8 percent of the entire budget of 2019/2020 fiscal year, which is a good indication towards our objective of self-reliance.”
A closer look at the 2019/20 budget shows the reverse. Kagame’s Rwanda remains a Banana Republic heavily dependent on foreign aid.
The 2019/2020 budget demonstrates the reverse of the regime’s claim that it is moving towards self-reliance.
According to Rwanda finance minister, the total budget for 2019/20 is RWF2.87 trillion or US$3.2 billion. He then says that RWF1,963.8 or US$2.1 billion will come from ”domestic resources.” Here, the minister’s story begins to fall apart. The US$2.1 billion to be raised from within Rwanda, in the minister’s own words ”include domestic borrowing.” Even though the minister does not reveal the amount of money that will come from domestic borrowing, he nonetheless indicates what will come from the government via taxes. In the minister’s own words, ”tax revenue collections are estimated at Frw 1,535.8 billion which accounts for 53.4% of the total budget.” Put in another way, the regime’s own contribution to the 2019/20 is US$1.7 billion representing 53.4%.
This is embarrassing in a double sense. First, here is a regime that can mobilize only 53.4% of its budget from its own tax revenue but keeps boasting that it is an African success story. Second, here is a regime that thinks everyone else is stupid and will swallow its falsehoods.
Where will the rest of budget financing come from?
The rest of budget financing for 2019/20 will come from donor grants and loans — and of course, domestic borrowing. The ministry of finance describes donor financing of the budget as follows:
”The remainder of the budget will be funded through external sources worth Frw906.7 billion which accounts for 31.5% of the total budget. These include grants worth Frw409.8 billion (14.2%) and loans worth 497.0 billion (17.3%).
There goes Kagame’s financial self-reliance. As indicated in the ministry of finance’s statement, the external grant and external loan components of the 2019/20 budget amount to RWF9 billion or US$1 billion representing 31.5%.
Enormous amounts of foreign grants and loans go into Rwanda’s development budget.
There is worse news than foreign grants and loans that amount to 31.5% of Kagame’s budget. This is shown by the financing of the development budget as opposed to the recurrent budget. In 2019/20 Rwandan budget, 49.5% of the total budget is earmarked for the recurrent budget, while 40% will finance development budget.
The development budget amounting to RWF1.15 trillion or US$1.2 billion reveals an additional form of donor dependence by the Kagame regime. Donors will pump into the development budget some RWF458.2 billion or US$511 million versus the regime’s own funding of RWF694 billion or US$775 million. In other words, the difference between what Kagame and the donors will spend in capital formation is a mere US$264 million. And if 2017/18 is any indication, the Kagame regime may not fulfill its promises and donors may once again step in to supplement the development budget. Here is how the Ministry of Finance explains what happened in 2017/18:
”During the FY 2017/18, total actual capital expenditure amounted to 850 billion FRW…The increased performance under this category was driven by foreign financed expenditure and offset the shortfall in domestic capital financed. Regarding the domestically financed portion, the amount of 463 billion FRW spent was 23.4 billion FRW lower…This lower spending was due to some delays in completing all spending documents including those of tendering on time. While the excess in foreign capital expenditure was due to accelerated implementation of several on-going infrastructural projects especially in the roads sector.”
Wonders never cease in Kagame’s Rwanda
The Kagame regime claimed that it is moving towards financial self-reliance. Stripped of domestic borrowing, foreign grants, and foreign loans, the regime’s own contribution to the 2019/20 is US$1.7 billion representing 53.4%. This is not an indication that Rwanda is achieving self-reliance. Far from it. This is further evidence that in Rwanda, wonders never cease.