REPUBLIC OF RWANDA

MINISTRY OF FINANCE AND ECONOMIC PLANNING

BUDGET EXECUTION REPORT FOR THE FISCAL YEAR 2016/17

August, 2017

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TABLE OF CONTENT

I. INTRODUCTION...... 3

II. Brief Summary of Economic Performance in the first half of 2017...... 4

II. PERFORMANCE OF RESOURCES...... 5

i. Performance of Domestic Resource Mobilisation...... 5

 Tax Revenue Performance...... 6

. Direct Taxes...... 6

. Taxes on goods and services...... 7

. Taxes on international trade...... 8

 Non- tax Revenue...... 8

IV.PERFORMANCE OF OUTLAYS...... 10

 Recurrent Expenditure...... 11

 Wages and Salaries...... 11

 Goods and Services...... 12

 Interest Payments of ...... 12

 Transfers and Subsidies...... 13

 Exceptional Expenditure...... 14

 Net Lending outlays...... 15

 Capital Expenditure...... 15

V. SECTORAL PERFORMANCE ...... 18

VI. Deficit and Financing...... 38

VII. Conclusion ...... 39

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I. INTRODUCTION.

Following a deterioration in economic performance in fiscal year 2014/15 due largely to lower commodity prices notably minerals on one hand and expansionary fiscal and monetary policies that increased imports on account of large public and private investment projects causing an increase in the current account deficit and loss of reserves on the other hand, the Government in fiscal year 2015/16 agreed with the IMF on a three year macro economic adjustment policies package to be supported with a stand -by credit of about USD 204 million. The 2016/17 budget therefore is an important component of the set of policies implemented in the adjustment process for this fiscal year.

This budget execution report for the fiscal year 2016/17 builds of the previous report for the July 2016 to March 2017 already posted on the website and extends the coverage period to end June 2017.

In June 2016 Parliament approved of the original budget totaling FRW 1949.4 billion. This original budget was revised in December 2016 and in January 2017, Parliament approved of this budget totaling FRW 1 954.2 billion. In economic classification terms, the revised budget estimated total revenue and grants at FRW 1567.1 billion and total expenditure and net lending at FRW 1891.3 billion. This revised budget was projected to close with a deficit of FRW 344.3 billion. The deficit was to be financed with a net external borrowing of FRW 350.4 billion which will not only fully finance the deficit but also allow a small build up of banking sector deposits of FRW 6.1 billion. Budget implementation during the fiscal year 2016/17 was affected by general economic performance and donor disbursements which affected the flow of resources on one hand and periodic fluctuations in expenditure commitments on the other hand which impacted on spending.

After this brief introduction, the report is organized as follows: Section two will give a brief summary of domestic economic performance in the first half f 2017.Section three discusses the performance of total resources that accrued to the budget whilst section four will deal with the economic classification of expenditures. The fifth section discusses the details of sectoral performance and the sixth portion of the report will deal with the overall balance and how it was financed. The report closes with a brief conclusion.

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II. Brief Summary of Economic Performance in January-June 2017 period.

Regarding the domestic economic performance, developments in the January-June 2017 period were mixed but important. In the area of the real sector, GDP growth of 1.7 percent in the first quarter of 2017 was much lower than the 8.9 per cent registered in the same period of last year. All sectors contributed to this low performance. In the agriculture sector, sluggish performance notably from food and export crops sub sectors largely contributed to the lower growth in this sector. Growth in the industry sector was negatively impacted by a negative growth of 12 percent in the construction sub sector in the first quarter of 2017 compared to a good positive growth of 10 percent in the corresponding period of 2016. This low performance in 2017 is due to the fact that several major public and private constructional works were completed during the first quarter of 2016 and boosted the high growth registered. Lower growth in the services sector was also largely affected by the growth of negative 12 percent and 2 percent respectively in the trade and transport sub sectors in the first quarter of 2017 compared to 10 percent and 9 percent respectively in the same period of 2016. These sectoral performances caused the overall low GDP growth recorded in the first quarter of 2017.

Inflation remained high in the latter part of 2016 and the first few months of 2017 largely due to high food price inflation associated with the drought and high imported inflation linked to the high depreciation seen in 2016 and beginning of 2017. Inflation has showed signs of declining recently as the inflation ( end of period basis) declined from 7.3 percent in December 2016 to 4.8 percent at end June 2017.

In the case of the external sector, the trade deficit in the first half of 2017 narrowed from USD 902.4 million in 2016 to USD 681.2 million in 2017 as exports increased whilst imports declined. This performance was due to two main factors. In the case of exports these rose from USD 268.9 million in the first half of 2016 to USD 375.9 million during the same period in 2017 and showed an increase of USD 97 million. Better performance from tea, cassiterite, some non- traditional exports and re-exports accounted for this good performance. Regarding imports, total imports in the first half of 2017 of USD 1047.1 million were USD 124.2 million lower than the USD 1171.3 million registered in the same period of 2016.With the exception of petroleum products where total outlays were slightly higher than in 2016 and reflected global price increases, most other categories of imports registered declines and accounted for the overall lower value of imports in the first half of 2017. In the case of consumer goods there was a decline in clothings reflecting the ban on used clothes and an increase in ‘made in Rwanda ‘textile

4 | P a g e products, whilst the decline in the imports of cement under intermediate goods reflects lower activity in construction in 2017 compared to 2016 where some large public and private sector projects were completed. The lower imports under capital goods affected mainly machines, devices and tools.

The National Bank of Rwanda (BNR) continues to implement a flexible exchange rate policy as an adjustment instrument. Whilst the exchange rate depreciated by about 9.7 percent in calendar year 2016, there has been a slow down in the first half of 2017. The depreciation was about 1.2 percent at end June 2017.

In the monetary area, the foreign assets of the commercial banks, which declined sharply to about FRW 13.3 billion at end March 2016, recovered to FRW 79.6 billion at end December 2016 and rose sharply to FRW 119.3 billion at end June 2017. It appears that the assets of the commercial banks have benefitted from the good performance of the external sector notably from total exports during the first half of 2017 as mentioned above. Regarding private sector credit growth, the first half of 2017 registered a growth of about 8.3 percent against a growth of about 8 percent recorded in calendar year 2016.There was therefore some recovery in private sector credit growth in the first half of 2017 compared to the same period of last year.

II. PERFORMANCE OF RESOURCES.

As indicated above, total resources in the revised budget approved by Parliament in January 2017 amounted to 1948.6 billion FRW comprising total domestic revenue of 1240.5 billion FRW and total external resources (grants and loans) of 708.1 billion FRW. At the end of the fiscal year in June 2017, total resources that accrued to the budget amounted to 1960.3 billion FRW and exceeded the estimated amount by 11.8 billion FRW. Shortfalls in external loans disbursements were more than offset by excess domestic revenue mobilization and caused the accrual of excess resources. i. Performance of Domestic Resource Mobilisation.

The table below shows the details of domestic resource mobilization comprising tax and non-tax revenue collections for the fiscal year 2016/17.

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 Tax Revenue Performance. Tax revenue collections were affected by domestic economic conditions, on-going administrative measures implemented by Rwanda Revenue Authority (RRA) as well as changes in the tax laws. Total tax collections in the fiscal year amounted to 1104.1 billion FRW and exceeded the revised budget projected amount of 1101.4 billion FRW by a small amount of 2.7 billion FRW. Excess collections under direct taxes more than offset lower collections under taxes on goods and services and taxes on international trade and caused the small excess mentioned above in the fiscal year 2016/17.

. Direct Taxes.

Collections under direct taxes in the July 2016 to March 2017 period amounted to 331.9 billion FRW and reached 468.4 billion FRW at the end of the fiscal year in June. This amount collected exceeded the revised projected amount for the fiscal of 448.6 billion FRW by 19.8 billion FRW. As was the case throughout the fiscal year under review, both company income taxes and PAYE contributed to this good performance. In the case of company income taxes, collections of 190.5 billion FRW exceeded the projected figure of 178.3 billion FRW by 12.2 billion FRW. All sub tax categories ( CIT, PIT and Withholding taxes) contributed to this good performance. Regarding profit taxes, contributions from the financial sector ( banking and insurance) as well as from construction and transportation and storage sectors contributed the largest shares. This performance was boosted by the change in the law to remove CIT discounts based on employment levels in the financial sector. As a result of this change in the law there were fewer claims for discounts. Furthermore, there was a ‘one off’ payment of tax made from the sale of UMUBANO hotel during the fiscal year. This performance of company profit tax collections by and large reflects a more profitable environment in

6 | P a g e business activity in the country. The contribution of withholding tax within profit taxes also registered a good performance with significant payments from contractors executing various public contracts including supplies of goods and services and private sector withholding tax on import taxes. Regarding PAYE, collections up to end March 2017 amounted to FRW 188.4 billion. At end June 2017 total collections reached FRW 257.7 billion and also exceeded the revised estimate of FRW 254.8 billion slightly by FRW 2.9 billion. This good performance was also due to better collections on account of increases in salaries and bonuses of both public institutions and other private sector companies. Furthermore Rwanda Revenue Authority in course of the fiscal year roped in new taxpayers arising from increases in employees paying PAYE. In addition to the contributions from company profit taxes and PAYE, tax collections from the Local Government entities contributed an amount of 17.4 billion FRW in the fiscal year 2016/17.

. Taxes on goods and services. Taxes on goods and services collected during the nine month period from July 2016 to March 2017 amounted to 397.3 billion FRW. By end June 2017 collections have reached 544.8 billion FRW but registered a shortfall of 15.5 billion FRW compared to the projected figure of 560.3 billion FRW for the fiscal year. Whilst VAT collections of 352.4 billion FRW met the target, Excise duty collections of 134.2 billion FRW were 12.7 billion FRW lower than the 146.9 billion estimated FRW and were therefore largely responsible for this shortfall under taxes on goods and services. Total VAT collections of 352.4 billion FRW benefitted from the following factors. First, even though there was a general increase in non taxable sales as a proportion of turnover, RRA was able through improved monitoring systems put in place to reduce some slippages thereby increasing the taxable portion of the turnover growth particularly in the services sector including wholesale and retail trade and finance and insurance. Secondly, the introduction of the input VAT validation system in January 2017 boosted domestic VAT collections by slowing down the increase in local input claims. In addition, the removal of VAT exemptions for investors were positive on VAT collections and also contributed to the good performance mentioned above.

In the case of excise duties, as mentioned above, collections of 134.2 billion FRW were 12.7 billion FRW lower than the FRW 146.9 billion estimated in the fiscal year under review. Both imports and domestic components accounted for the shortfall. Regarding the imports component, the shortfall was due to a decline in imports particularly during the first half of 2017 of about 11 percent as mentioned above. Some of the taxable goods affected include petroleum products and vehicles. Concerning the domestic portion of excise duties, the shortfall was due to lower than expected consumption and

7 | P a g e performance of the four largest contributors to excise duties namely beer and soft drinks as well as petroleum products and use of mobile airtime. The decline in collections for beer and soft drinks amounted to 4.8 percent and 11.7 percent respectively. Those for petroleum products and use of airtime were 2 percent and 9.7 percent respectively.

. Taxes on international trade.

Collection of taxes on international trade during the nine month period from July 2016 to March 2017 amounted to 65.5 billion FRW. At end June total collections reached 91.2 billion and registered a small shortfall of 1.3 billion FRW compared to the estimate of 92.5 billion FRW for the fiscal year. This shortfall was attributable to lower imports as mentioned above of about 11 percent. A portion of the reason for the decline was due to policy changes that increased duties on second hand clothes and some vehicles aimed at reducing the importation of these goods. The other relates to the lower importation of cement in the first half of this year. In the corresponding period of last year imports were high as there was an increased demand for these products for the completion of some public and private sector large construction projects. These ‘one off’ imports were not repeated in the first half of 2017 thereby affecting import duty collections.

 Non- tax Revenue. Non tax revenue collections for the nine month period to end March 2017 amounted to 147.4billion FRW. At end June collections for the fiscal year stood at 181.4 billion FRW against a revised estimate of 139.1 billion FRW for the fiscal year. There was therefore an excess accrual of 42.3 billion FRW. Reimbursements from the UN for Peace Keeping Operations and better collections of both Central and Local Government fees and charges were responsible for the excess. In the case of reimbursements by the UN, a portion of the disbursements was for reimbursement to Government for pre financing the cost of the additional troops sent to Sudan in fiscal 2015/16. A large amount of these receipts accrued in the January-June 2017 period when an amount of USD 75.6 million was made as against USD 25.8 million envisaged for the period. A portion of these receipts has been earmarked for the troops and this amount has since been paid to them.

Regarding other non tax revenue collections by Local Government entities, collections on several items including rental charges, trading license fees and property taxes amounted to 30.4 billion FRW compared to the estimate of 34.2 billion FRW for that

8 | P a g e period. There was therefore a small shortfall of 3.8 billion FRW. The revised estimates assumed sales of some districts assets. In the end these did not take place and accounted for the shortfall under this tax item. In the case of other administrative fees and charges the collected amount of 22.5 billion FRW exceeded the target of FRW 20 billion by 2.2 billion FRW. This performance shows a strong recovery in other administrative fees and charges including visa, passport and driving license fees in recent months.

III. Performance of External Resources.

The table below shows the performance of external resources in the fiscal year 2016/17.

Total external flows projected for the fiscal year 2016/17 amounted to 708.1 billion FRW comprising FRW 326.6 billion of grants and 381.5 billion FRW of loans. At end March 2017, total external resources that accrued to the budget amounted to 491.5 billion FRW. At end June 2017 this total had increased to 674.8 billion FRW as against 708.1 billion FRW projected for the fiscal year. There was therefore a total shortfall of 33.3 billion FRW. Lower draw down of project loans largely accounted for the shortfall in the disbursement of external resources.

Regarding budgetary grants, the total amount disbursed during the fiscal year under review amounted to 330.2 billion FRW against 326.6 billion FRW estimated. There was

9 | P a g e therefore a small excess of 3.6 billon FRW which came from increased disbursement from the Global Fund.

In the case of external loans, whilst the disbursement of budgetary loans was on track and met the target, the draw-down of project loans of 160.7 billion FRW for the fiscal year under review, fell short of the estimated amount of 197.9 billion FRW by 37.2 billion FRW. This shortfall in project loans disbursement was therefore responsible for the overall shortfall in external budget support funds mentioned above. As has been mentioned in the earlier budget execution reports, delays in project implementation of some foreign financed infrastructure projects notably in energy and roads sectors caused the lower disbursements.

IV.PERFORMANCE OF OUTLAYS.

As mentioned above, the level of spending during the fiscal year was impacted by delays in finalizing all the paper work required for spending and payments. Total outlays in the nine months period from July 2016 to March 2017 amounted to 1375.3 billion FRW. This amount was 33.2 billion FRW higher than the 1342.1 billion FRW projected for that period. In the three months to end June 2017, this acceleration in spending continued and at end June, total expenditure and net lending amounted to 1945.5 billion FRW. This outturn amount was 48 billion FRW higher than the 1897.8 billion FRW estimated for the entire fiscal year 2016/17. Both recurrent and capital spending contributed to the excess expenditure.

The table below shows the details of outlays according to economic classification for the fiscal year 2016/17.

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Table 3. Spending

July-June 2016/17 billion FRW Proj. Prov.Act Total expenditure and net lending 1,897.8 1,945.5 Current expenditure 1,040.0 1,069.6 Wages and salaries 258.3 295.8 Purchases of goods and services 207.4 194.1 Interest payments 78.6 72.2 Domestic Int (paid) 40.6 35.3 External Int (due) 38.0 36.9 Transfers 360.3 348.2 of which expenditures on local government taxes 54.2 47.9 Exceptional social expenditure 135.4 159.4 Capital expenditure 741.9 759.5 Domestic 398.0 418.2 Foreign 343.9 341.3 Net lending 115.8 116.4 Source: MINECOFIN

 Recurrent Expenditure. Total recurrent spending in the nine month period from June 2016 to March 2017 amounted to 804 billion FRW. By end June 2017 this amount had risen to 1069.6 billion FRW and exceeded the fiscal year’s estimate of 1040 billion FRW by 29.6 billion FRW. Lower expenditure under goods and services, interest and transfers were more than offset by higher expenditure under wages and salaries and exceptional expenditure and caused the excess outlays.

 Wages and Salaries. During the nine months period from June 2016 to March 2017, an amount of 216.2 billion FRW was used for wages and salaries. In the three months period from April to end June an additional amount of 37.5 billion FRW was added to this figure bringing total outlays for wages and salaries to 295.8 billion FRW. This figure therefore exceeded the revised budget estimate of 258.3 billion FRW by 35.7 billion FRW. Whilst a portion of this excess spending was due to a classification issue as some payments for some civil servants whose emoluments had been classified under transfers would have been paid with allocations under wages and salaries, the other portion of the excess was due to payments associated with new recruitments notably in health and education sectors, restructuring costs in some ministries as well as late payments of some bonuses and allowances on account of promotions.

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Within the wages and salaries figure, an amount of 60.2 billion FRW was used to pay the wages and salaries of pre-primary and primary schools teachers in the districts. An additional amount of 26.8 billion FRW was used for wages and salaries of secondary school teachers. Total emoluments of the various health personnel in the districts amounted to 27.9 billion FRW. The judiciary sector comprising the supreme court and the National Prosecuting Authority ( NPPA) used an amount of 9.7 billion FRW for wages and other allowances. The cost of administrative and other support services for the chamber of deputies and the senate amounted to 2.5 billion FRW and 1.3 billion FRW respectively.

 Goods and Services. Expenditure under goods and services in the nine months period from July 2016 to March 2017 was 148.9 billion FRW. This figure increased to 194.1 billion FRW at end June 2017 but was 13.3 billion FRW lower than the annual estimate of 207.4 billion FRW. Delayed finalization of some contracts in the ICT area partly accounted for the shortfall in spending. Despite the shortfall in total spending, allocations for all the various priority items were fully utilized by the end of the fiscal year These included the expenditure on books of 6.7 billion FRW and outlays of 31.9 billion FRW for the purchase of various drugs and dressings, vaccines and other medical supplies during the fiscal year 2016/17. The schools feeding program cost the Government 4 billion FRW whilst an amount of 2.4 billion FRW was spent on the acquisition of ICT equipment, software and other related assets. An amount of 50.1 billion FRW was spent on consultancy and other technical assistance services. The Government also spent 13.1 billion FRW for the payment of membership dues to various regional and other international organizations as well as for the acquisition of shares and equity in some foreign entities. Running costs of the Supreme Court and of various embassies during the fiscal year 2016/17 amounted to 2.2 billion FRW and 5.1 billion FRW respectively.

 Interest Payments of In the July 2016 to March 2017 period an amount of 51.9 billion FRW was used for interest payment on both domestic and external debt. In the last quarter of the fiscal year 2016/17 an additional 20.3 billion FRW was paid bringing the total outlays for interest to 72.2 billion FRW. This amount was 6.4 billion FRW lower than the revised estimate for the fiscal year of 78.6 billion FRW. Both domestic and external components contributed to the lower expenditure.

In the case of the domestic component, actual payments amounted to 35.3 billion FRW and registered a shortfall of FRW 5.3 billion compared to the revised budget estimate of 40.6 billion FRW. Lower than expected sales of short term securities for budgetary

12 | P a g e financing purposes led to the lower interest payments. This was due to the fact that all the expected external donor budget support funds accrued on time. Transactions done by the Government on domestic securities front during the 2016/17 fiscal year increased the total stock from 398.7 billion FRW at end June 2016 to 448.7 billion FRW showing an increase of FRW 50 billion. During the fiscal year 2016/17 there was a slight structural shift in the holders of Government securities in favor of the non bank sector. The share of the commercial banks which amounted to about 63.4 percent at end June 2016, declined slightly to about 61 percent at end June 2017.

With regards to the external sector portion, total interest paid in the nine months period from July 2016 to March 2017 amounted to 24.2 billion FRW and was on track with the projections. In the last quarter of the fiscal year 2016/17 an amount of FRW 12.7 billion was used for interest on external debt and brought the total payment for the fiscal year to FRW 36.9 billion. There was therefore a shortfall of FRW 1.1 billion compared to the revised budget figure of FRW 38 billion. Lower draw down of project loans alluded to in the previous two fiscal years accounted for the lower interest payments in the 2016/17 fiscal year.

 Transfers and Subsidies.

As mentioned in the March 2017 report, spending under Transfers and Subsidies during the nine months period to end March was 249.8 billion FRW and exceeded the estimate of 210.4 billion FRW for that period by 39.4 billion FRW. In that report it was also mentioned that acceleration of spending by several public institutions in the January- March 2017 period accounted for these excess commitments and also that a large portion of these commitments were contract obligations. In the fourth quarter of the fiscal year an amount of 98.4 billion FRW was spent. Total spending therefore amounted to 348.2 billion FRW and was 12.1 billion FRW lower than the revised budget estimate of 360.3 billion FRW. It is evident that a large portion of this shortfall in spending is a classification issue as some aspects of wages and salaries for some public institutions which were put under transfers during the budget formulation, have been paid and classified under wages and salaries. This treatment as mentioned above under wages and salaries caused a portion of the excess spending and at the same time resulted in the shortfall in spending under transfers and subsidies. It is expected that when we switch the budget formulation and reporting to the GFSM2014 format this issue of categorization will be resolved.

In the fiscal year 2016/17, the amount spent under transfers and subsidies allowed the expenditure of 11 billion FRW on capitation grants to the districts. The Rwanda

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Correctional Services received 21.8 billion FRW for their operations including running costs and welfare of inmates, whilst the Rwanda Revenue Authority was allocated 23.5 billion FRW for its revenue collection operations including communication and other supporting activities. The Workforce Development Authority and The Rwanda Housing Authority received subventions of 10.3 billion FRW and 4 billion FRW respectively for their operations. The Rwanda Education Board was also allocated 41.1 billion FRW for its various activities including scholarships, conduct of examinations, development of curricula and pedagogical materials as well as for other professional services including security. The Rwanda Energy Development Corporation and the Rwanda Development Board also received funds of 12.3 billion FRW and 2.3 billion FRW respectively for their operations. The Auditor General’s Office also received an amount of 1.7 billion FRW for its activities whilst transfers to the National Institute of Statistics amounted to 3 billion FRW during the period under review for its operations. The outlays under Transfers and Subsidies in the fiscal year 2016/17 also allowed the transfer of 43.8 billion FRW of block grants to the various districts for their running costs during the period under review.

 Exceptional Expenditure.

In the July 2016 to March 2017 period an amount of 137.2 billion FRW was spent under exceptional expenditure. This figure was 39.2 billion FRW higher than the 98 billion FRW estimated for the period. The excess spending was due to front loading of additional funds required for UN Peace-Keeping operations including those in South Sudan. At end June 2017, total spending under exceptional expenditure had risen to FRW 159.4 billion which was 24 billion FRW higher than the revised projection of 135.4 billion FRW for the fiscal year 2016/17. This excess spending was solely due to the front loading of PKO expenditure alluded to above. Total spending on this item therefore amounted to 128.2 billion FRW which was 24.1 billion FRW higher than the revised budget figure of 104.1 billion FRW. The UN has since reimbursed the Government with a portion of this expenditure resulting in the disbursement of an amount totaling 128.5 billion FRW alluded to above under non tax revenue collections.

During the period under review, the expenditure under exceptional spending also allowed 28.5 billion FRW to be spent on the provision of various social services for numerous survivors of genocide. An amount of 2.7 billion FRW was also spent on the resettlement of returning refugees and demobilized active soldiers and repatriated insurgents.

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 Net Lending outlays. In the revised budget approved by Parliament in January 2017, a net amount of 115.8 billion FRW was allocated for spending under net lending. This figure assumed gross spending of 127.3 billion FRW and gross receipts of 11.5 billion FRW from the sale of Government of Rwanda’s remaining shares in I&M bank valued at 8.9 billion FRW as well as from the sale of Umubano hotel with an expected value of 2.6 billion FRW. These receipts were to be used to finance Government of Rwanda’s initial equity in the Bugesera Airport project. At end June 2017, total gross spending amounted to 122.9 billion FRW whilst only gross receipts of FRW 6.5 were recorded under this item. The net expenditure of 116.4 billion FRW was therefore only FRW 0.6 billion higher than the revised estimate of 115.8 billion FRW.

Regarding the expected divestiture receipts, at end June only FRW 6.2 billion of the expected FRW 8.9 billion from the sale of I and M bank had been captured in our data. There are however indications that the entire amount had been realized and we will revise the fiscal data when all the information is available. The FRW 2.6 billion from the sale of Umubano hotel is yet to accrue. Despite the delay in the accrual of all divestiture receipts , the Government paid in full its initial equity of 11.5 billion FRW in the Bugesera Airport project for the project to take off. The total net lending spending figure therefore includes this equity amount.

 Capital Expenditure.

In the July 2016 to March 2017 period a total amount of 525.4 billion FRW was spent on capital projects. This figure was made up of 282.4 billion FRW of domestically funded projects and 243 billion FRW of foreign financed projects. In the last quarter of the fiscal year 2016/17 an additional amount of 234.1 billion FRW was spent. As a result total capital expenditure for the fiscal year under review reached 759.5 billion FRW. This figure is 17.6 billion FRW higher than the revised budget amount of 741.9 billion FRW. The excess spending under the domestically financed portion more than offset the shortfall in the area of the foreign financed portion and caused the excess expenditure. The amount spent allowed the implementation of several on-going priority projects such as the’one laptop per child’ project with an amount of 14.5 billion FRW and the ‘one cup of milk per child’ policy with an amount of 1.4 billion. The on-going ‘one cow per family’ project also took an amount of 0. 9 billion FRW

Regarding the foreign financed portion, it was already indicated in the March budget execution report that delays in finalizing all supporting documents associated with the tendering processes caused shortfall in the draw- down of external project loans and

15 | P a g e consequently shortfalls in spending. Even though there was a slight improvement in draw-down and implementation in the April to June 2017 period, the draw-down of project loans of 55.7 billion FRW was still low compared to the projections. Consequently total capital expenditure that is financed with the 2016/17 fiscal year flows of capital grants and loans registered an amount of 306.8 billion FRW which was FRW 37.1 billion lower than the revised figure of FRW 343.9 billion. As mentioned in various reports once again delays in completing all documentation that respect the procurement law caused the lower expenditure.

However in the January- June 2017 period, the sectors drew down 34.5 billion FRW of accumulated deposits and spent this amount on various projects. The addition of this amount to the figure of 306.8 billion FRW mentioned above, raised the executed foreign financed capital expenditure from 306.8 billion FRW to 341.3 billion FRW as indicated in the attached fiscal table.

The sectoral analysis portion of the report presents some highlights of programs and projects implemented in the fiscal year 2016/17. However the table below shows some selected domestically funded capital projects implemented during the fiscal year.

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V. SECTORAL PERFORMANCE

I. ECONOMIC AFFAIRS SECTOR

In the sub-sector of agriculture, below are some of the keys achievements registered during the fiscal year 2016/2017; furthermore those achievements are in line with PST3 and Agriculture Policy in Rwanda. - In order to increase productivity and sustainable agriculture, the Ministry of agriculture and animal husbandry continued to implement the on-going land consolidation policy aimed at increasing arable land and expand production. In fiscal year 2016/17 the following results were achieved : Maize 409,905.7ha, Beans 109,256 2ha, Soybean 35,529 ha, Irish potatoes: 181,446 ha and Wheat 109,159.5ha and Cassava: 67,663 ha. - In the implementation of the policy of seed development and distribution to farmers during all agriculture seasons the quantity produced and imported were as follows: Stem of cassava 230,471,820 MT, Maize 3,289.2MT and Wheat 964.645 MT. In the case of hybrid version produced locally and distributed the quantity were as follows; maize 10.532 MT, Soybean 164 MT and Irish potatoes 5,930 MT and Cassava cuttings 148,126,320MT. - In line with Government’s initiative to increase productivity of Marshland through the construction of irrigation systems in different parts of the country 1320.2 ha of irrigated land was constructed under Government Funded Irrigation/Quick Win Marshland Development Project in fiscal year 2016/17. Additionally in the area of Hill side irrigation, 1465 ha of land was irrigated at Mpanga,Nasho, and Ngoma. - Access to Small Scale irrigation technology was availed to several farmers who were facilitated to get access to various equipment. The total area irrigated through these systems was 2,130 ha across the country. - With a view to fight soil erosion and depletion, on- going efforts in the construction of terraces continued. In all 16,515.37 ha were developed

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comprising 6123.4 ha of Radical terraces and 10,391.97 ha of progressive terraces. - In line with the policy to increase productivity and sustainable animal resources 77,221 cows were inseminated during the 2016/17 fiscal year. - In th fiscal year under review, several activities were implemented to increase Fish production. These included training of farmers in fish feeding methodology, assisting farmers to develop fish farming business models and how to keep farming data, and monitoring of the closure of Lake Kivu to improve fish production in the lake. All these activities helped to increase fish production during the fiscal year with an estimated total production of 26,528 MT. - Under the on-going ‘one cow per family’ project, 34,072 cows were distributed to poor families through Girinka Program. - In line with the policy to increase export of agricultural products with high commercial values, 18,168 MT of coffee, 26,891 MT of tea, 11.1 MT of Pyrethrum and 25,939.9 MT of Fruits and vegetables were produced and exported to different international markets. - In line with the policy to reduce post harvest losses by increasing Post Harvest storage facilities, 11 warehouses were constructed in Nyamasheke, Rutsiro, Kamonyi, Ngoma, Kayonza, Nyanza and Musanze Districts. - Consistent with the policy of reducing hunger and drought vulnerability and at the same time enhancing food Security and Nutrition in the country 15,948.2MT of Beans and Maize were added to the strategic reserves stocks.

Trade and industry

In the sub-sector of Trade and Industry, emphasis was placed on the policy to increase external connectivity of the outside world to the Rwandan economy and thereby boosting exports. This is a key priority under EDPRS-II and a powerful tool to spur economic growth, raise living standards and reduce poverty. It is from this point of view that the following achievements were realised during the fiscal year 2016/17:

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- 72 Irish Potatoes Collection Centres were inspected in Rubavu and Nyabihu Districts to prepare them for the value chain and market linkage strengthening program. In addition 74 Irish Potatoes Collection Centres staff and Cooperative leaders were trained in Irish Potatoes Collection Centres (IPCCs) Accounting, Cooperative governance, Cooperative Accounting and Internal Control for the value chain and market linkage strengthening program. Additionally, 66 contracts were signed between various farmers and East Africa Exchange (EAX) and 19,782 MT and 5,679,570 FRW were collected for the operationalization of the warehouse receipt system. - New start up (Micro, Small and Medium Enterprises) MSMEs were supported and 23,500 SMEs were able to access Loans totalling RWF 10,490,168,806 as well as guarantees of RWF 3,188,851,287 through the BDF guarantee scheme. Furthermore, 110 Crop intensification program Cooperatives were trained and coached on cooperative management, financial accounting, internal control and related topics.

- National Employment Program (NEP) awareness campaign, mobilization and communication plan was approved by stakeholders. In addition to that, 27,945 youth were mobilised to take part in different NEP interventions. Furthermore, 327 young people with special needs were grouped into cooperatives and linked with BDF to commence loan procedures for toolkits start-up loans. By end of the fiscal year 150 out of 200 had received their loans.

- construction works for the Rubavu bonded warehouse was estimated at 10% at the end of June 2017. Export growth facility (matching grant and investment catalyst fund) achieved an implementation rate of 66% as several exporters accessed the fund after I& M Bank and BPR Ltd signed MoUs with BRD (Commercial banks offering facility).

- Work on the Kigali Logistics Platform was estimated at 20% including fencing, supervision and infrastructure development. 247 Cooperative members including 80

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cooperative leaders from four border districts of Nkora, Kagitumba, Gatuna and Cyanika were trained in Simplified trade regime and taxation - In support of Made in Rwanda campaign, three new garment companies established their factories. These are BCT Ltd which is a joint venture between NOGUCHI Holdings and Burera District. The others are African Sewing Club and C&H Garment Ltd who are operating in KSEZ. Two other garment companies “HEMA Garment Ltd based in Musanze district and the Kigali Garment Center Ltd in Kicukiro District acquired premises, machines and a few staff for their factories and are ready to start their operations.

- Rwanda’s exports to the EAC (formal and informal) increased by 15% in 2016 reaching US $ 179.4 Million from US$ 156. 6 Million in 2015. These exports in Volume terms showed an increase of 18% from, 114,283,122 kgs in 2015 to 134,676,800 Kgs in 2016 .This increase was achieved because 8 Non-Tariff Barriers were eliminated and this boosted the EAC trade with Uganda and Tanzania. - 48 Beekeeping cooperatives of Rutsiro, Burera, Nyabihu, Musanze and Ngororero Districts were equipped with the necessary skills required to produce enough Honey for both local and export markets. Regarding the Rutsiro Honey CPC, 40 out of 70 sampled (for Industrial green technology transfer analysis) were found to be implementing green technologies. - Construction works of relocating Gikondo Industrial Parks was at 97% at the end of June 2017 with the expropriation of 71 garages and warehouses completed. In the case of the construction of Bugesera Industrial Park (Phase I/100H ha) work was estimated at 38% at the end of June 2017.

In the sub-sector of Information Communication Technology, the following achievements were realized during the fiscal year 2016/17:

- The 5th edition of Youth Connect Convention brought together 3,290 youth among them 1,249 Female and 2,041 Male from all Districts and from Universities and High Learning Institutions, Youth organizations and youth from diaspora.

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- 180 young Innovators in ICT were supported in different ways such as participation in Regional Seed Stars Summit, in the Aspire Debate Competition, in the revision of the ICT Centric National Innovation Ecosystem, and also attended the Solar powered vehicle competition in India and Transform Africa Summit.

- 36% of internet penetration has been achieved and 484,571services were requested and approved through Irembo platform for at least 56 categories of online Services available on Irembo platform. This created some job opportunities through ICT enabled Business Process outsourcing companies.

- 17,957people (male & female) have been trained in Digital literacy and digital skills and moreover the International Computer driving Licence Digital Citizen training content is now available in Kinyarwanda and one could have (a Soft copy) for more information if required.

In the Transport sub-sector, the following achievements were realized during the 2016/17 fiscal year: in line with the efforts to improve and sustain the quality of road network, several roads were constructed, upgraded or maintained. These include:

- Construction works of Rubengera-Gisiza 24.1km road (Kivu Belt Lot 6)was estimated at 80% while the progress of the construction works of Kivu Belt Lot 7: Gisiza-Rubavu road of 48km was at 88%;

- The construction of Base-Butaro-Kiramboroad of 68km and Base-Rukomo road of 51km have started and progress is at 14.7% and 41% respectively;

- Work on the construction of the Gatuna One Stop Border Post was estimated at 33.24% while that of the Nkora Port is ongoing and planned to be completed by the 1st quarter 2017/2018;

- The study on the preliminary engineering design for the Kampala-Kigali railway was completed;

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- The study for the construction of Ngoma-Bugesera-Nyanza road of 130 km was completed, financing has been secured from the World Bank and JICA. Site mobilization and tendering process are ongoing and construction is expected to start in 2017/18 FY;

- Tendering process for the rehabilitation of Huye-Kitabi road and Kagitumba- Gabiro road of 60km was completed, site mobilization is ongoing and rehabilitation works are expected to start soon, while rehabilitation work for Gabiro- Kayonzaroad of 56km is ongoing;

- Periodic Maintenance of Ruhango – Kinazi-Rutabo, Kinazi- Mukunguri road (36.3 km) as well as the first phase of Mbuga–Mpimbi-Burerabana-Nyabinoniroad (34 km) was completed while the contract for the second phase regarding the maintenance of Mbuga–Mpimbi-Burerabana-Nyabinoni is under negotiations;

- Maintenance of Rwamagana-Gishali flower plant access road (12 Km) was completed, while the progress on the rehabilitation of Rukali-Kabuga unpaved road (DR95) in Nyanza District (40.1 Km)was at 99%;

- maintenance work of Gashora and Rwabusoro Bridges was at 98% and 45% respectively while maintenance work of black spots on the Pindura -Bweyeye road was estimated at 85%;

- Periodic maintenance work on the Kigali-Huye-Akanyaru road (157km) and Umukobwamwiza, Kamonyi, Ruhango Black spots as well as Kigali-Kayonza road (74.8km) is ongoing;

- The first phase of the multi-year maintenance of Rusizi-Bugarama Road (46km) and Gisakura Black spot was completed and the second year maintenance started.

- Four new aircrafts (2 A330 Airbuses and 2 B737-800 Boeings) were acquired for RwandAir and integrated into RwandAir operations.

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In the Energy and fuel sub-sector the following are the achievements made during the fiscal year 2016/17:

- In line with the effort to increase access to electricity, 107,603 new households were connected to on-grid electricity against the annual target of 80,509 households while 142,903 households were connected through the off grid systems.

- Medium Voltage (MV) and Low Voltage (LV) lines were constructed and connected to 272 Productive use areas and social sites; the productive use areas include irrigation sites, water Pumping stations, tea factories, schools, markets; health centres, milk collection centres, commercial centres and model villages;

- Construction work for 170km High Voltage Transmission Line (220kV) Shango- Rubavu Bwishyura-Kibuyewas was completed;

- The construction of High Voltage Birembo substation as well as Ntendezi- Bugarama high voltage transmission lines (17.5km) were completed and energized; - The construction of 110kV Transmission Line Rulindo-Gicumbi-Gabiro-Musha as well Gabiro and Musha substations is ongoing with progress at 46% and 70% respectively.

- Rehabilitation of the 110/30kV Rulindo and Gifurwe substations stands at 89% and 95% respectively and is expected to be completed on 27th August 2017;

- The overall progress for installation of new 110/30kV transformer was at 95%;

- 15 MW Gishoma peat power plant was tested for commissioning and minor defects detected. These are being corrected before final commissioning;

- A concession agreement was signed between government and private sector for the construction of 60 million litres fuel storage tanks;

In the water and sanitation sub-sector the following are the achievements made during the fiscal year 2016/17:

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In line with the policy to increase access to clean drinking water to 88% and the target to construct new 512 Km of water systems in rural areas and serve 328,321 new people with clean drinking water, the following water supply systems were completed:

 Construction of Nyumgwe-Kibeho-Ndago-Coko water supply system of 112 Km, Construction of Giheke-Kamembe-Nkanka water supply system (126 km) in Rusizi District and Construction of Nkombo Water Supply Systems that supplied water to 17,500 population; - reinforcement and extension of Water Supply System Ruhashya-Ntyazo (95 Km) and water supply system in Nyanza was at 59.2% against 50% planned while the reinforcement of Kageyo-Ngororero town Water Supply System (22km) was at 98%; - construction of water supply system from Gihengeri Water Treatment Plant to Nyagihanga, Ngarama, Gatsibo sectors in Gatsibo District (60 km) was at 60% as planned; - Progress on the construction of Nyabizi-ButaroKivuye water supply system to supply water to University of Global Health Equity in Butaro was at 35%;

 Construction of new Nzove I water treatment plant was at 83%; while the construction of Karuruma-Gatsata water network was completed. Regarding the Muko-Jali water network what is remaining is the construction of five taps. The overall progress on both sites was estimated at 99%;

 To improve access to sanitation services, the construction of 3 solid waste and 3 faecal sludge treatment plants in Kayonza, Nyanza and Nyagatare districts was estimated at 95%.

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 The study for Kigali Centralized Sewerage System has been completed including Environment and Social Impact Assessment (ESIA), institutional and economic feasibility as well as Engineering design.

In the housing sub-sector the following are the achievements made during the fiscal year 2016/17:

- Constructional work on the National Archives Building is progressing and it stands at 30% as planned;

- Progress of work on the High Commercial Court Building was estimated at 28.2% while work on the Administrative Office Complex is estimated at 47% against 40% planned;

- In line with the policy to provide potential investors with land serviced with basic infrastructure facilities for affordable housing, 52 Ha of land was serviced with 30% basic infrastructure. There are plans for the construction of 4,500 Affordable Housing Units by various investors; Batsinda 1: Site installation is at 70% with general road construction at 60.08%, swales and borders works at 100%. Construction of houses at Kabuga (Abadahigwa) are at 57.1% and Infrastructure provision is at 65%. - Regarding the provision of basic infrastructure in secondary cities, the construction of roads and water supply systems in Musanze district were completed. For Huye district, the construction of roads was completed while water supply and electricity supply were at 85% and 97% respectively. In Nyagatare district, water supply was 90% and electricity supply activities at 40%; - The scale up of IDP Model Villages by constructing 48 dwelling units and servicing 6km of plots in 6 Secondary Cities was estimated at 91%;

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- 32,301Households living in Scattered Settlements and in high risk zones were relocated.

II. EDUCATION SECTOR

The achievements of the Education Sector for the fiscal year 2016/17 are in line with the Economic Development and Poverty Reduction Strategy (EDPRS-II) and Education Sector Strategic Plan (ESSP) 2013/14-2017/18. The achievements are presented in Sub Sectors (Pre-Primary, Primary, TVET, Higher Education and Science, Technology and Research Program) and focus on Access, Participation, Quality of Education and Relevance. The following are the key achievements made in education sector during the fiscal year 2016/17.

In the sub-sector Pre-Primary and Primary Education the main key achievements realised are as follow: - In order to increase the students/books ratio in pre-primary school 80,740 textbooks were procured and distributed for pre-primary schools and 1,719,849 books were purchased for P2,P3, P4, P5, P6 and 1,447,208 textbooks distributed in schools by 15 publishers; - In order to increase the pre-primary and primary education access, relevance and quality, a total number of 3,958 Sector Based Trainers including 385 for pre-primary have been trained on the implementation of Competency Based Curricula and 211 teachers trained on E- solution system;350 classrooms and 296 cubicle latrines built;627 XO laptops were maintained and repaired. In the sub-sector of secondary education, the main key achievements registered are as follows: - 535 schools equipped with 100 Laptops each and out of 110 schools with smart classrooms (2 smart classrooms for each school) which makes in total 220 smart classrooms. It is planned that all 100 laptops in two rooms will be connected

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to 4G by August with free content package with Khan Academy and Wikipedia. Each room will also have projectors and connected to Fiber optic. - For this fiscal year the School feeding program in 12YBE schools covered 92% students from 9 and 12 YBE schools and this means that a population of 396,441 were getting lunch. These include 320,491 (80.8%) getting lunch at school and 43,712 (10.9) % at home. Besides 86,980 children benefited from one cup of milk program at school.

- To support students with disabilities, a curriculum for children with intellectual disabilities and teachers guide were elaborated and 39 Teachers from 13 special schools and 5 TTCs have been trained in Special Needs and Inclusive Education and five existing special and mainstream schools transformed into schools of excellence in Special Needs and inclusive Education (SN&IE) supported in terms of resource rooms, equipment and teachers training in SN&IE. - In partnership with RURA, 97 schools were connected to internet around the country; - Study on causes of dropout and repetition in Primary and Secondary were conducted; - 126,165 adult people were trained in adult literacy program.

In the sub-sector of Technical and Vocational Education and Training (TVET) the following are the main key achievements registered within the sector as far as the increase of equitable access to relevant, high-quality and demand-driven TVET program was concerned. Regarding construction work of Schools under Presidential pledges (Nyabihu, Muhanga, Rulindo mining school) the overall progress wa sat 62% at the end of June 2017. - To improve the quality of TVET schools, the following schools were supplied with training equipment for different occupations (Electrical, Plumbing, Welding, Carpentry, Masonry, Culinary Arts and Tailoring): NYAMATA TSS, KAVUMU VTC, NELSON MANDELA, MPANDA and GISENYI VTC. To this end 3,345 TVET trainers

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were trained on pedagogical module and 26 TVET Competence Based Curricula were developed. - Under Recognition of Prior Learning, 10,283 crafts men were assessed, graduated and certified. - The project financed by KFW to renovate 5 TVET schools (NYAMATA TSS, KAVUMU VTC, MPANDA VTC, NELSON MANDELA, and GISENYI VTC) is progressing well. Construction work of MPANDA VTC was at 90% and the work on the 4 schools remaining stand at 30% at the end of June 2017. - In the case of the National Employment Program (NEP) being implemented through Hands-on Skills short-term training for unskilled people, WDA developed a training plan for Short term training in 3 approaches such as Massive Vocational training (MVT) and Rapid Response Training (RRT) and Industrial Based Training (IBT). Under MVT (Massive Short Term Vocational Training) 569 beneficiaries were trained (Under Rapid Response Training 550 trainees were trained, Under Industrial Based training (IBT) & Apprenticeship 1,030 people were trained in both Apprenticeship and IBT. In the sub-sector of higher education emphasis was on improving the quality of higher education and relevance. Accordingly, the following are the main achievements recorded. - In line with the priority of Government to increase the number of students in Science Technology, Engineering and Mathematical (STEM) programs, there has been a significant increase enrolment in STEM: 14,987 students (52%) of the total student population in 2016/17 compared to 14,888 (49%) of the total student population in 2015/16; - In alignment with Government priorities to build the capacity in the mining sector, the University of Rwanda has opened the School of Mining and Geology (SMG) with two departments namely Mining and Geology in the College of Science and Technology.

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- construction of Rusizi campus stands at 35% at the end of June 2017, this includes the Concrete of beams and slabs of ground and 1st floor completed at 100%, supply of electricity completed at 50%. - The following Higher Learning Institutions were granted Accreditation (African Institute of Mathematical Sciences – AIMS, African Leadership University – ALU and VATEL School Rwanda) and Education sector also hosted two international symposium on science and technology : one was the 27th World Academy of Sciences General Meeting which was hosted in Rwanda and brought together more than 250 scientists from all around the world and the second was the biennial African School of Physics hosted in 2016 and brought together 76 students representing 29 countries including 20 students from Rwanda;

- The African Institute for Mathematical sciences, Rwanda campus was established and supported. 44 students from 10 countries including 19 Rwandans are now pursuing their Master’s Degree courses. - In the case of the Faculty of Architecture and Environmental Design (FAED) in UR, construction work is currently estimated at 75%. This means that the structural works have already been completed and finishing in progress . The project has been granted a six months of extension until March 2018. - In partnership with REMA, through the Climate Change Observatory Secretariat(CCOS) MINEDUC signed an agreement and got a fund from FONERWA, to support the Air Quality and Climate Change Monitoring Network Project. - New academic programmes were approved (Master of Science in Mathematical Sciences to be offered by African Institute of Mathematical Sciences (AIMS), Master’s Degree in Health Supply Chain Management to be offered through the School of Public Health in UR-College of Medicine and Health Sciences on behalf of the Regional Centre of Excellence for Heath Supply Chain Management). - To ensure that new and existing academic programmes comply with norms and standards of higher education, 27 Higher Learning Institutions with different

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programs were inspected and audited, their programs were reviewed to ensure the quality and relevance of existing academic programs.

III. Health sector

During the Fiscal Year 2016-2017, the Health Sector through a number of strategies continued to develop measures to improve the availability and access to quality healthcare. The following are the key achievements registered by the health sector for the fiscal 2016/2017 through different health programs;

- To support the initiative to fight against communicable and non-communicable diseases, insecticides resistance monitoring survey was conducted in 12 sites i.e. Mimuli, Bungwe, Mashesha, Kicukiro, Rwaza, Kivumu, Busoro, Karambi, Bukora, Rukara, Mubuga, Mareba and actions were taken to address any deficiencies observed. Indoor residual sprayings were done in the districts of Bugesera, Gisagara, Gatsibo, Nyagatare and Kirehe to cover 386,034 structures in the first phase and 156,504 structures in Huye and Nyanza in the second phase. A total of 542,538 structures were sprayed in both phases which represents 98.8% coverage. - Home based management of malaria (HBM) supervision was conducted for adults and children in the following District Hospitals; Nyanza, Nemba, Gahini, Mibirizi, Kigeme, RemeraRukoma, Rwamagana, Kibagabaga, Kiziguro, Kabgayi , Bushenge, Shyira, Ruhango, Masaka, Muhororo, Byumba, Nyamata, Kibuye. The percentage of Children <5 years who are treated by community health workers (CHW) within 24hrs of symptoms onset was at 96% by the end of June.

- Quality assessment and control of anti-malaria drugs was done to ensure improved malaria diagnosis and treatment. A report was submitted to RBC and the results showed that 196 out of 196 (100%) samples collected from 49 sites have good quality. All necessary Malaria treatment commodities have been received and are available in stock.

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- In order to increase the number of HIV+ adults and children currently receiving antiretroviral therapy, clinical mentorship sessions focusing on the implementation of HIV Care and Treatment Differentiated Service Delivery Model (DSDM) were conducted by Clinical Mentors in 40 District Hospitals, an experience-sharing workshop was held among clinical mentors from 42 District Hospitals on implementation of DSDM. The Multiplication of Education Materials, including Hepatitis B&C leaflets [106560 leaflets], Booklet on STIs [7260 booklets], Posters for STIs [1200 booklets] were done and all materials were distributed in Health facilities. In order to increase the number of nurses prescribing Antiretroviral Treatment, a task shifting was conducted whereby a total of 493 nurses were trained. As of now the proportion of HIV+ adults and children currently receiving antiretroviral therapy is at 82.7%. - In order to improve the management of TB cases, quarterly evaluation and supervision meetings were conducted, Kibagabaga and Kabutare hospitals were supervised and the first annual workshop on quantification of TB commodities was conducted in September 2016. - To maintain High immunization coverage, all District Hospitals are supplied monthly with vaccine and vaccine devices from RBC in order to avoid stock outs. 90% of eligible children (at 15months by age) country wide were vaccinated against measles and Rubella from April to June 2017.

- The construction of Shyira hospital was completed and the provisional handover was done in June 2017. All services have been shifted from the old buildings to new buildings. To ensure geographical accessibility to health services, the construction of Byumba, Gatonde, Munini and Nyabikenke district hospitals are expected to resume in 2017/2018 despite the challenges experienced.

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IV. Social protection sector

In social protection sector the main activities achieved for fiscal year 2016/2017 are related to the provision of support to the vulnerable groups, assistance to disaster victims and repatriate and assist Rwandan refugees. The following are the key achievements made in social protection sector during 2016/2017 fiscal year;

- Under the public works component of the VUP program ,114,492 households classified under extreme poverty category were covered under the VUP public work program in 244 Sectors and a total amount of 5,290,593,691 FRW was paid to classic public work beneficiaries. For VUP direct support component; 91,315 households including 63,529 and 27,786 headed respectively by females and males received cash transfers of 6,224,706,450 FRW benefited from VUP direct support while under the VUP financial services component; 14,614 VUP financial services loans were approved and disbursed including 12,776 individual loans, 1,404 group loans and 434 loans to cooperatives. Furthermore, 25,865 people including 13,454 males and 12,411 females received VUP financial loans. - 19,114 households are benefiting from minimum package for graduation (MPG) and specifically 9,636 households among them got small livestock. In addition, the minimum package for graduation (MPG) has been updated and graduation contracts with beneficiaries were signed. - In line with supporting needy genocide survivors; 1,642 Incike were supported with special direct support and 23,719 other beneficiaries assisted with ordinary direct support, 677 houses were constructed and rehabilitated, 2293 beneficiaries were assisted under special medical treatment, 1,025 cows out of 500 cows were provided to identified beneficiaries in 16 districts and 14,006 students were supported with school fees and monthly living allowance in TVET and Higher learning Institutions. - 31,100 cows were distributed to poor families under one cow per power family program and in line with increasing Incomes of poor households through provision of small livestock, 3,100 goats were distributed in Nyaruguru and Bugesera Districts,

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27,000 hens were distributed in Nyamasheke and Rusizi, 1,287 pigs were distributed in Nyaruguru and Nyamasheke - In order to support vulnerable children and also avoid malnutrition in children, 17,052 under-five children with acute and chronic malnutrition were supported and 3,105,228.5 litres of milk were distributed in 484 health centers. Functional distribution system of fortified blended food was put in place in all health centers and for children under 2 years old and pregnant mothers in UBUDEHE Category1. In all, 1451.92 tons of fortified blended food (for babies and for mothers) were purchased and distributed to beneficiaries. Moreover, 1,988,029 households have been fitted with Kitchen gardens. - In line with government’s efforts to fight against Gender Based Violence, the construction and equipment of all 17 Isange One Stop Centers have been fully completed.

- In order to reduce family related disputes, all 29,674 Inshutiz'Umuryango (friends of the family) countrywide were trained and supported with headsets to facilitate them in information sharing and reporting on family related disputes and issues.

- to reintegrate street children into families; 1357 children (615 from orphanages, 668 from centers for children on streets and 74 children of three years of age with their mothers in detention centers) were placed into families and alternative family based care and the monitoring of reintegrated children is regularly done by 68 trained social workers and psychologists in different Districts

- Child right protection: 116 Persons were punished due to engagement of Children in the worst form of Child labour, 7,169 Children were withdrawn from Child Labour and 64,369 Children were reintegrated in schools.

- 7,641 returnees out of 6,000 annual target were assisted in reintegration process and they received repatriation packages which have been increased starting from October 2016, for Adults from $100 to $250 and for children from $50 to $150.

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- Furthermore ,under the Umuganda program, 97 houses were built for 97 households, 4520 iron sheets and 1017 kgs of nails were distributed to 113 households in Rubavu, Karongi andGakenke. 951 families (composed of 3915 persons) were given small livestock (goats and pigs.) - To support the Disaster response and recovery program, 128,636 Households affected by drought in Southern Province and Eastern Province have been assisted with 7,900,522 Kgs of maize, and 3,852,815 Kgs of beans. In addition, 1,243 Households in the above provinces were assisted with non-food items and 3,880 Prisoners who were affected by fire incident at Gasabo prison have been assisted with different kinds of non-food items.

V. Environmental Protection Sector

In Sub-sector of Environment and natural resources, the annual sectoral performance report was drawn from the major areas implementing programs for mainstreaming environmental sustainability into productive and social sectors and reducing vulnerability to climate change as stipulated in the EDPRS 2 document. The following are the main key achievements made during the fiscal year 2016/17:

- to ensure equitable water allocation and utilization, the rehabilitation plans of upper Nyabarongo and Sebeya were made available and contracts signed for the rehabilitation of 1,104 ha upper Nyabarongo and 986 ha on Sebeya catchment area. So far rehabilitation is on-going and 72/ 1104 ha covered in upper Nyabarongo catchment area and 9.8/986 ha covered in Sebeya catchment area.

- Water database upgrading was completed with 900 water users registered for fostering equitable water allocation and utilization framework while 2000ha of Watersheds were rehabilitated and water storage enhanced. - For piloting a green city, current investments of 5.9 Million Euros has been secured (0.9 Million Euros) to conduct a feasibility study in Kinyinya and 5 Million Euros for investment in affordable housing in partnership with RSSB and IFC).

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- To improve environmental research, Planning and M&E, the inception report was made available and the 5th State of Environment as well as the final sectoral GHG inventory reports were produced (energy, industrial process and product use, AFOLU and waste).

- In order to increase the knowledge about national mineral and petroleum potential , the geophysics works of multi-beam Echo sounder started in Lake Kivu for updating data for further confirmation of petroleum acreage while existing and recent exploration data were reviewed and confirmed as reliable for next phases and key potential areas for further mineral exploration activities were identified. - An amount of RWF 3.42 billion was realized from the project aimed at promoting Value addition technologies to wood and non-wood forest products as well as from harvesting state forest plantations.

VI. Justice Sector

In the Justice sector and in line with the implementation of prioritized policy actions agreed within the sector, efforts made have led to the following achievements in 2016/2017 fiscal year: - At the end June 2017, the Integrated electronic cases management system (IECMS) project was being used in 5 most concerned institutions (RNP, NPPA, Judiciary, MINIJUST, RCS).All the courts in Rwanda are connected (Supreme Court, High Court and its 4 chambers; all commercial Courts; all intermediate and Primary Courts) to the IECMS as well as the 71 offices of the Prosecution (NPPA) including the headquarters. In Rwanda National Police, 113 (24%) out of 454 planned Offices were connected; all the 14 prisons and RCS headquarters are using IECMS. In general, IECMS is operational 100% in Judiciary, 100% in MINIJUST (the Civil Litigation Department and 30 District MAJ offices), 100% in NPPA, 100% in RCS and 24% in RNP. - The Ministry of Justice has trained 16,402 mediators (Abunzi) in 29 districts country wide on Law governing organization, jurisdiction, and competence and functioning of Mediators committees; Law governing persons and family; and the Law

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governing matrimonial regimes, donation and succession. Regarding the provision of transport to Abunzi and to facilitate their work, 5000 bicycles were distributed country wide up to end June 2017.

- In accordance with the Legal Aid to Community project (From July 2016 -June 2017) House of Access to Justice received 16,967 cases in which 11,306 (66.8%) were handled through providing legal advices or/and mediations; 2,974(17.5%) were handled by preparing court submissions, 2,606 (15.3%) have been handled in other institutions while 81 (0.4%) were still ongoing. - From July 2016 to June 2017; 73,911 cases have been received including 9,196 ordinary cases and 64,715 Gacaca related cases. The settled ordinary cases are 7,651 (83.1%) while settled Gacaca cases were 21,495 (33.2%). - In order to recover embezzled funds, a total of 1.240.969.743 FRW and 8743 USD were recovered for the government. - In the construction infrastructure for the sector, the following is progress in 2016/17: construction of “Nyanza Court house” at 90% at the end of June 2017; construction of the commercial court was estimated at 29.2% at the end of June 2017 and the construction of ILPD was also estimated at 59% at the end of June 2017. - Work on the Kigali Forensic Laboratory was estimated at the level of 98.5% and the installation of equipment was at 21%. Up to the end of June 2017, forty police officers were trained in DNA analysis, forensic investigation and forensic technical skills. The construction of 4 police regional headquarters was estimated at 98, 6%. - construction work on MAGERAGERE prison was estimated at 83, 5% at the end of June 2017 which facilitated the reallocation of 5,214 men inmates from Nyarugenge and Gasabo prisons; the first inmate’s block was completed in RUBAVU and the fourth inmate’s block in RWAMAGANA was fully constructed. Construction work of RCS training school was estimated at 98,6% at the end of June 2017.

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VI. Deficit and Financing.

The table below shows the details of the budget deficit for fiscal year 2016/17 and how it was financed.

As indicated above,the revised budget approved by Parliament in January 2017 estimated total revenue and grants at 1 567.1 billion FRW and total expenditure and net lending at 1897.8 billion FRW. The revised budget was to end the fiscal year with an overall deficit of 350.7 billion FRW. This deficit was to be financed with net external borrowings of 356.9 billion RWF. This amount was not only to finance the deficit but it would also allow the Government to build up a small banking sector deposit of 6.1 billion FRW.

As mentioned in the report covering the period from July 2016 to March 2017, total revenue and grants for that period amounted to 1170.7 billion FRW as against 1140.1 billion FRW projected for the period. On the spending side, total outlays amounted to 1375.3 billion FRW as against 1342.1 billion FRW estimated for the same period. The Government’s fiscal operations at the end of that period from July 2016 to March 2017 (excluding arrears) therefore closed with a smaller deficit of 191 billion FRW as against 218.1 billion FRW projected for that period.

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With the accrual of net external loan resources of 246.6 billion FRW during that period, not only was the Government able to finance this deficit but it also allowed it to accumulate domestic financial resources of RWF 55.6 billion.

At the end of the fiscal year in June 2017, total revenue and grants had risen to 1615.8 billion FRW, which exceeded the revised budget estimate of 1567.1 billion FRW by 48.7 billion FRW . Total expenditure and net lending in the fiscal year of 1945.5 billion FRW also exceeded the revised projected figure of 1897.8 billion FRW by 47.7 billion FRW . The 2016/17 budget therefore closed with an overall cash deficit of RWF 349.8 billion which was 0.9 billion FRW lower than the 350.7 billion FRW estimated in the revised budget,

This deficit was financed partly with net foreign borrowing amount of 322.7 billion FRW which was lower than the 356.9 billion FRW estimated by 34.2 billion FRW and partly with net domestic financial resources of 27.1 billion FRW . In the case of the lower foreign borrowings, again as mentioned above this was due to delays in the disbursement of project loans for foreign financed capital projects. Regarding the domestic portion of financing, there were two sources namely the banking and non bank sectors. The contribution from the banking sector came from the Central bank and was in the form of a draw- down of Government’s accrued deposits to finance a portion of capital expenditure mentioned above. The contribution from the non bank sector was from sales of Government securities ( Treasury Bills and Bonds).

VII. Conclusion

As mentioned at the beginning of the report, the implementation of the 2016/17 budget was affected by domestic economic conditions and donor disbursement patterns which impacted on resource flows and fluctuations in expenditure commitments which affected the level of spending. On the resources side domestic revenue mobilization performed well and despite occasional delays, disbursement of donor budget support funds also performed well. It is expected that some of the experiences gained in domestic and external resource mobilization will prove useful in future fiscal operations. On the external front this will involve periodic engagements with all donors.

In the case of expenditures, the major issues were delays in the implementation of both domestically and foreign financed capital projects. It appears some elements in the procurement law being implemented to enhance transparency and ensure value for money in procurement and invoicing created some difficulties and slowed progress in capital spending. This issue was noted by Government and efforts are under way to address them. In this regard, various stakeholders are being acquainted with these

39 | P a g e elements and systems including the introduction of the proper utilization of an e-procurement procedure to speed up the tendering and procurement process in order to accelerate investment spending. To ensure a quick resolution of any outstanding issues, the Ministry of Finance and Economic Planning (MINECOFIN) has established a team to deal with any residual issues that the public may have. It is expected that this process will prove beneficial in the implementation of the 2017/18 budget.

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