VZCZCXYZ0025
RR RUEHWEB

DE RUEHLGB #0179/01 0731139
ZNR UUUUU ZZH
R 131139Z MAR 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 5178
INFO RUEHNR/AMEMBASSY NAIROBI 1158
RUEHDR/AMEMBASSY DAR ES SALAAM 1074
RUEHJB/AMEMBASSY BUJUMBURA 0260
RUEHKM/AMEMBASSY KAMPALA 1842
RUEHFR/AMEMBASSY PARIS 0436
RUEHKI/AMEMBASSY KINSHASA 0395
RUEHDS/AMEMBASSY ADDIS ABABA 0158

UNCLAS KIGALI 000179 
 
SIPDIS 
 
SIPDIS 
 
REF:  A. 07 Kigali 000935 
      ¶B. STATE 16737 
 
DEPARTMENT FOR AF/C 
DEPARTMENT PASS USTDA: EEBONG 
DEPARTMENT PASS USTR: WJACKSON 
DEPARTMENT PASS COMMERCE: RTELCHIN 
DEPARTMENT PASS OPIC: BCAMERON 
ADDIS FOR LISA BRODEY 
 
E.O. 12958:  N/A 
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: RWANDA CONGRESSIONALLY-MANDATED REPORT ON FISCAL 
TRANSPARENCY 
 
 
¶1. SUMMARY:  President Paul Kagame continues to be a 
strong proponent of fiscal transparency within the 
Rwandan government (GOR).  His government's strong anti- 
corruption stance, policies of financial openness and 
several significant financial reforms have been commended 
by the IMF as well as other multi-national organizations 
and donor missions.  Following the dictates of the 
Organic Budget Law, each fall the budget for the upcoming 
year is presented to Parliament and, once passed, is 
published in both the official gazettes and online. 
While financial accountability has been sometimes 
hindered by a lack of capacity, the GOR is working hard 
to make improvements in the area.  Kagame's mandate for 
fiscal transparency is supported by the large donor 
community who provide 50 percent of GOR's budget.  The 
donor community's support for fiscal transparency is 
often twofold, mandating fiscal transparency in GOR 
budgetary accounts while funding independent projects to 
foster transparency and accountability throughout the 
GOR. End Summary. 
 
¶2.  Each fall the Finance Minister presents to the 
Parliament the budget for the upcoming fiscal year, which 
runs January - December.  The GOR encourages members of 
Parliament, donors and individuals from the private 
sector to weigh in on the budget.  Once approved by 
Parliament, the budget is then published in the official 
gazettes in Kinyarwanda, English and French.  Since 2006, 
the GOR has also posted the budget online in both French 
and English on the Minster of Finance's website.  The 
published budget is extensive and contains all GOR 
revenues and expenditures.  The online posting allows 
users to view the budget breakouts by Economic Category, 
Agency, Programmes or Sector and Sub-Sector. 
Additionally, the 2008 Budget online posting contains 
budgetary estimates through 2010. 
 
¶3. Beyond the budgetary process, President Kagame's 
strong commitment to fiscal responsibility has meant the 
GOR has been committed to working with multi-national 
organizations in areas of fiscal reform, anti-corruption 
and good governance.  The GOR continues to work the IMF 
to ensure that Rwanda is compliant with IMF standards and 
codes covering fiscal transparency.  The IMF reports on 
Fiscal Transparency (2003), Banking Supervision (2005) 
and Monetary and Financial Policy (2005) proposed a 
number of recommendations that have been adopted by the 
government. 
 
¶4. One of the most ambitious projects undertaken by the 
GOR is the Public Financial Management Reform Project 
(PFMRP) which started in the mid-2000s.  Run by the 
Ministry of Finance, the project is designed to bring 
greater fiscal transparency and accountability through a 
multi-tiered approach to creating a more comprehensive 
financial structure and oversight.  Under PFMRP, the GOR 
introduced a broad range of reforms including crafting 
new legal frameworks for the management of public 
finances, development of training programs, strengthening 
audit programs, and implementation of new standardizing 
financial software.  In 2006, the first set of 
consolidated public accounts was published showing all 
Qconsolidated public accounts was published showing all 
revenues, expenditures, financial assets and liabilities 
at a national level.  In 2007, a new Organic Budget Law 
went into effect and the PFMRP began a four-year 
strategic plan with continued financial reforms planned 
through 2010. 
 
¶5. While the GOR has a strong commitment to fiscal 
transparency and good intentions to bring this policy 
into all levels of the government, the lack of capacity 
sometimes hinders full financial accountability.  In 
October 2007, IMF officials found that implementation of 
the Organic Budget law suffered from complicated 
regulations being implemented by ministries and agencies 
 
that were understaffed and undertrained (see ref A).  The 
GOR agreed with the IMF?s assessment, and the two 
recently signed a MOU in February in which improved 
management and coordination of the budget is a benchmark 
goal of Rwanda's IMF Poverty Reduction and Growth 
Facility Program. 
¶6. While the expenditures listed in the budget are 
accurate, recent internal audits have shown troubles in 
the management and oversight of the finances, due again 
to lack of capacity.  The Office of the Auditor General 
for State Finances is a government agency that performs 
annual internal audits of the GOR?s finances.  In Oct 
2006, the Auditor General reported that at least Rwf 3.6 
billion was poorly accounted for in the 2005 budget 
cycle.  The audit found, among other things, poor 
management and oversight practices contributed to the 
lack of accountability and called for increased training 
of accounting officers and board members.  The GOR was 
quick to respond, launching a probe the following spring 
into forty-six government entities, resulting in several 
criminal prosecutions.  In March 2008, the Auditor 
General testified before Parliament that Rwf 5.3 billion 
expenditures, out of a budget of Rwf 404.7 billion, were 
unsupported by sufficient documentation during the 2006 
budget cycle.  Reaction from Parliamentarians was swift 
and angry; further investigations will follow. 
 
¶6. Many donors work to bring fiscal transparency to 
Rwanda. As with the IMF's Poverty Reduction and Growth 
Facility Program, there are often mandatory conditions to 
budgetary support that foster fiscal transparency and 
accountability.  The British, German and Belgium 
governments, and the EU, IMF and World Bank all stress 
fiscal transparency and often participate in budgetary 
and financial policy meetings.  The GOR has a strong 
relationship with the donor community and encourages 
collaboration.  Donors also support independent programs 
that foster fiscal transparency and good governance, as 
the in case of the Swedish and Netherland governments who 
provide monetary and technical support to the Office of 
the Auditor General. 
 
¶7. While not providing budgetary support, the USG also 
continues to work for fiscal transparency and support 
accountability and good governance in Rwanda.  While 
USAID provides a range of programs that work to foster 
good governance, the Twubakane Decentralization and 
Health Program specifically focuses on increasing fiscal 
transparency and accountability as one of its main 
components. The Twubakane Program works to not only 
provide the district governments with direct funding for 
health care, but to also provide the districts with the 
opportunity to strengthen their budget and planning 
capabilities and demonstrate their management skills.  An 
essential capacity building step within the program is to 
train district accountants in preparation and management 
of budgets as well as software to track funds. 
 
¶8. Comment: The GOR and President Kagame are committed to 
fiscal transparency and accountability and are continuing 
to undertake numerous reforms to foster accountability 
and fight corruption.  Although the government does 
Qand fight corruption.  Although the government does 
struggle with a lack of capacity which can sometimes 
hinder its ambitious set of fiscal reforms, the GOR is 
proud of its good reputation for fiscal accountability 
and will continue to hard work to safeguard it.