VZCZCXYZ0000
PP RUEHWEB

DE RUEHLGB #0370/01 1681509
ZNR UUUUU ZZH
P 171509Z JUN 09
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 6129
INFO RUEHBS/AMEMBASSY BRUSSELS 0457
RUEHJB/AMEMBASSY BUJUMBURA 0555
RUEHDR/AMEMBASSY DAR ES SALAAM 1369
RUEHKM/AMEMBASSY KAMPALA 2154
RUEHKI/AMEMBASSY KINSHASA 0708
RUEHLO/AMEMBASSY LONDON 0470
RUEHNR/AMEMBASSY NAIROBI 1490
RUEHFR/AMEMBASSY PARIS 0733
RUEHSA/AMEMBASSY PRETORIA 2094
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC

UNCLAS KIGALI 000370 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV EAID RW
SUBJECT: RWANDA'S 2009-2010 BUDGET TABLED BEFORE PARLIAMENT 
 
REF: KIGALI 0348 
 
 ¶1.  (SBU) Summary.  Finance Minister James Musoni introduced 
the Government of Rwanda's (GOR) 2009-2010 budget before 
Parliament on June 11.  His budget message laid out a USD 
1.452 billion budget, up 24 percent from last year in nominal 
terms, with domestic resources for the first time exceeding 
donor budget contributions.  With the advent of the East 
African Community (EAC) Common External Tariff on July 1, the 
GOR stands to lose USD 21.5 million dollars, a significant 
revenue loss.  It will seek to recover this shortfall by 
application to a Common Market for Eastern and Southern 
Africa (COMESA) compensation fund, and through an increase in 
excise duties on telecommunications "air-time" from three to 
five percent.  The budget emphasizes infrastructure and 
education expenditures, with significant budget allocations 
made directly to the 30 district governments.  Contacts at 
the Finance Ministry project a budget deficit of about USD 
123 million, or 2.3 percent of GDP. Despite difficult 
economic trends worldwide, the GOR projects a 5 percent 
growth in its economy in 2009.  End summary. 
 
¶2.  (SBU) Finance Minister James Musoni presented to 
Parliament on June 11 the 2009-2010 budget, the first to be 
aligned with the EAC July 1 - June 30 budget year.  The USD 
1.452 billion budget rises 24 percent in nominal terms from 
the last 12 month budget (the GOR instituted a six month 
January-to-June 2009 bridge budget to span the old and new 
budget years).  With inflation now running at about 14-15 
percent, the real budget increase is less dramatic.  Musoni 
noted the difficult economic trends worldwide, and said 
Rwanda's 11.2 percent growth in 2008 was a "tremendous 
performance."  (The IMF and the GOR project a reduction in 
growth this year to just over 5 percent - see reftel). 
Musoni said he expected reduced demand for Rwanda's tea and 
coffee, reduced income from tourism, and possibly reduced 
budget support from donors.  Nevertheless, he said, Rwanda 
would fund important capital expenditures to develop key 
physical infrastructure (including roads, energy generation 
and distribution, and ICT projects).  Agriculture, which grew 
near twenty percent in 2008, will also receive significant 
budgetary support, and key health and education projects will 
also be pursued. 
 
¶3.  (SBU)  Important development projects Musoni discussed in 
some detail included: renovation of a number of "national" 
roads; finalizing of studies for the proposed Bugesera 
International Airport and for the Isaka, Tanzania to Kigali 
railway link; extensive construction of waterworks around the 
nation; completion of several electrical generation plants, 
including the 27.4 MW Nyabarongo dam; several fisheries 
projects; extensive fertilizer distribution; various seed 
projects; and various cooperative development projects. 
Health and education projects included: completion of various 
hospitals and health centers; distribution of 1.3 million 
mosquito nets; construction of 1,700 classrooms; distribution 
of 100,000 student laptops; acquisition of 500,000 textbooks; 
and various distance learning projects. 
 
 
¶4.  (SBU) Musoni also noted the commencement of the EAC's 
Common External Tariff on July 1, which entails various 
 
reductions in tariff levels and tariff income for the GOR, 
and will result in a USD 21.5 million revenue loss.  The GOR 
will seek to cover this shortfall with an application to a 
COMESA compensation fund, and an increase in 
telecommunications "air-time" tariffs from three to five 
percent (something the local telecomms companies grumbled 
about immediately).  A Finance Ministry contact told pol/econ 
counselor the GOR's application to the COMESA compensation 
fund would be the "first ever" by a COMESA government, with 
the fund supposedly being underwritten largely by the 
European Union.  The GOR will also partially cover its 
budgetary shortfall, estimated at USD 123 million (or 2.3 
percent of GDP) said the Ministry contact, with a one-time 
USD 42 million drawdown of Central Bank foreign exchange 
reserves. 
 
¶5.  (SBU)  Comment.  The 2009-2010 budget sustains the GOR's 
stated goal of pursuing economic development through improved 
infrastructure, better schools and health care, and a more 
 
productive rural sector.  President Kagame's oft-stated goal 
of reducing the size of foreign assistance is modestly 
reflected in the fact that, for the first time ever, just 
over half the budget is financed from domestic resources 
rather than donor budget support.  If Rwanda can weather the 
 
world economic storm, and grow by five percent this year, it 
will have turned in another remarkable, economic performance. 
 End Comment. 
 
 
 
SIM