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From: "Jean Bosco Sibomana sibomanaxyz999@gmail.com [rwanda_revolution]"
Subject: [rwanda_revolution] The East African - 30 minutes ago: Opposition cautions Kagame over $1b loan.
Opposition cautions Kagame over $1b loan.
The East African - 30 minutes ago.
Posted Saturday, August 16 2014 at 17:46
In Summary
Presidents Kagame says his government plans to borrow the money to
finance the construction of a new airport and for power generation,
but opposition politicians say the government is accumulating too much
unnecessary debt. Commentators are faulting the government for
resorting to massive borrowing in its effort to stem dependence on
donor funds as a result of the bad experience of 2012 when aid to the
country was suspended over alleged involvement in eastern DRC
violence.
The Rwandan opposition has urged the government to shelve plans to
seek $1 billion from international markets to finance key projects.
President Paul Kagame announced in Washington during the recent
US-Africa Summit that his government plans to borrow the money to
finance the construction of a new airport and for power generation,
but opposition politicians say the government is accumulating too much
unnecessary debt.
Rwanda secured a 10-year Eurobond worth $400 million to complete
construction of the Kigali Convention Centre and invest in energy.
Sources say part of the money was used to pay an expensive debt for
the national carrier, RwandAir.
"I think we are living beyond our means. What did we do with the $400
million that we borrowed? I do not see any progress on the Kigali
Convention Centre (KCC). Are they borrowing for elections? How
sustainable is this rare appetite for loans? We are concerned," said
Frank Habineza, chairman of the Democratic Green Party of Rwanda.
Should the government succeed in issuing the $1 billion bond, which
observers say is likely, it will have borrowed close to the equivalent
of its total annual revenue collections. In the fiscal year
20113/2014, the Rwanda Revenue Authority collected Rwf769 billion
($1.11 billion).
The opposition urged the government to embark on internal mobilisation
of resources to finance development programmes instead of borrowing.
The opposition said there is a need to implement such programmes in
phases by deploying the available resources augmented by limited
borrowings.
Claver Gatete, the Minister for Finance and Economic Planning, had
promised that KCC would be ready to host the recent AfDB Annual
Meetings that were held in Kigali. However, a number of experts have
defended the borrowings, saying the money is being invested in
projects that will spur growth.
"Indebtedness cannot be avoided but it should be well managed," said
Oscar Bahizi, a Kigali-based economist.
Angelo Musinguzi, a tax expert at KPMG, noted: "The government is
looking at developing infrastructure to attract investments that will
bring in more revenues.
"There would be a problem if they were borrowing for operation costs
but they are investing in projects that make returns and I assume the
loan will be spread over a period of time." He added.
Rwanda's total public and publicly guaranteed debt was estimated at
$2.16 billion, representing 30.2 per cent of the GDP as of June 2013.
The International Monetary Fund urged Kigali to ensure that any new
loan commitments do not put unnecessary pressure on the country.
"Going forward, Rwanda's fiscal policy will need to focus on domestic
revenue mobilisation to finance the authorities' ambitious development
goals.
Aligning spending with available resources and judicious selection and
financing of investment projects will minimise risks to the budget,"
said Naoyuki Shinohara, the deputy managing director and acting chair
of the IMF executive board on Rwanda.
Commentators are faulting the government for resorting to massive
borrowing in its effort to stem dependence on donor funds as a result
of the bad experience of 2012 when aid to the country was suspended
over alleged involvement in eastern DRC violence.
By Emmanuel Rutayisire and Alex Ngarambe
http://www.theeastafrican.co.ke/news/Opposition-cautions-Kagame-over--1b-loan-/-/2558/2421304/-/14ic3n6z/-/index.html
--
SIBOMANA Jean Bosco
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