Tax exemption for insecticides and mosquito nets

Rwandans are due to benefit from tax exemptions for anti-Malaria insecticides, chemically treated mosquito nets, text books and scientific journals if the National Assembly approves the 2004 budget proposals presented to it on Thursday by Finance and Economic Planning Minister Donald Kaberuka.

Despite an economic decline of 6 percent in 2003, compared a real GDP growth of up to 9.4 percent in 2002, the government has not proposed any new taxes, Kaberuka said.

He gave the reasons for a deficit of up to 11.3 percent of the GDP as including poor weather conditions that adversely affected food production, a reduction in world coffee prices, uncertainty in the petroleum market that led to an increase in domestic pump prices and reluctance by the donor community to release money.

The country's economic performance in the 2003 financial year only registered a growth of up to 3.5 percent real GDP and inflation shot up from 3.2 percent in 2002 to 10 percent, Kaberuka said.

Coffee production declined by 33 percent in 2003 while foreign budget support that was projected at US $169.08 million registered a shortfall of $56.05 million.

Kaberuka also said that a huge increase on public expenditure associated with the end of the transitional period in country had a huge impact on its economic growth. Three elections were held within the year - a referendum on the constitution, presidential and parliamentary elections.

Only the service sector and the construction industry registered marked growth in the year under review, Kaberuka said. The construction sector grew 16 percent.

The new budget proposals aim to revise the decline in GDP growth from the 3.5 percent to attain six percent growth.

The government also aims to shift resources to productive sectors of the economy such as fertiliser use to improve the agricultural sector, to put in place an agricultural guarantee fund, export promotion and boost infrastructure as well as the health sector.

Kaberuka also attributed the increase in Rwanda's recurrent budget to the introduction of universal primary and ordinary level education, securing anti-retroviral drugs for HIV/AIDS patients and feeding thousands of 1994 genocide suspects still in the country's prisons.