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<p>Yesterday Rwanda&#8217;s final budget for the 2020/21 fiscal year was read by the country&#8217;s Minister of Finance and Economic Planning, Uzziel Ndagijimana. In it, an expected decrease in tax revenue was revealed, as well as the amounts allotted for developmental efforts, domestic production and the transportation sector among others. KPMG Rwanda Senior Tax Manager, Angello Musinguzi joins CNBC Africa for more.</p>


What the 2020/21 budget means for Rwanda’s private sector

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Cosatu General Secretary, Bheki Ntshalintshali and Xhanti Payi, Economist &#038; Lead Researcher at Nascence Advisory spoke CNBC Africa in light of Finmin Mboweni’s proposal to cut the state&#8217;s wage bill by R160.2 billion over three years.</p>


Cosatu vs Mboweni over 2020 budget cuts


<p>By Kopano Gumbi, CNBC Africa markets reporter </p>



<p>Minister of Finance Tito Mboweni has decided to cut the strained South African consumer some slack this year by keeping taxes largely unchanged. </p>



<p><strong>READ:</strong><a href="https://www.cnbcafrica.com/insights/budget-day/2020/02/26/budget2020-risk-of-sa-remaining-investment-grade-by-moodys-has-become-more-pronounced/">#Budget2020: Risk of SA remaining investment grade by Moody’s has become more pronounced</a></p>



<p></p>



<p>Government will not raise additional revenue from tax
proposals this financial year.&nbsp; The R63 billion revenue shortfall, the
widest shortfall in a decade, is expected to be covered through the management
and consistent decrease of the public-sector wage bill.</p>



<p>“In this difficult economic time, it would be foolhardy to introduce a hike in VAT rates,” said Mboweni.</p>



<p> <a href="https://www.cnbcafrica.com/insights/budget-day/2020/02/26/budget2020-sas-finance-minister-tito-mbowenis-full-speech/">READ:#Budget2020: SA’s Finance Minister Tito Mboweni’s full speech</a> </p>



<p>This first budget tabled in the 6th administration has come at a difficult time. With economic activity grinding to a halt, the minister is stuck between al rock and a hard place. Real GDP growth is estimated to be a measly 0.3 percent for 2019 and the projections for 2020 and beyond remain bleak, barely crossing 1 percent. Tax collection revenue was again below expectations, and industry estimated that power cuts caused losses of about 0.1 per cent of GDP in the fourth quarter of 2019.</p>



<p>Ratings agency Moody’s, the last agency to keep South Africa
above investment grade, recently announced it was revising down South Africa’s
2020 growth forecast to 0.7 percent. National treasury estimates that 2020 real
GDP growth will be 0.9 percent. </p>



<p>The risk to South Africa keeping its investment-grade credit ratings has become more pronounced. The government has noted a sharp increase in borrowing requirements as the fiscal position worsens, and all things being equal, the debt requirement will reach nearly R500 billion in two years’ time. </p>



<p>It is within this context that the government will not raise
additional revenue from personal income taxes for this year. Choosing instead
to reduce the public-sector wage bill by R160 billion and committing to
spending the already limited resources more prudently. A move that may delight
concerned citizens but aggravate unions that have already expressed displeasure
with the proposal to reduce public sector wages. </p>



<p>“Eventually government and public service workers will find
each other somewhere along the way, but for the credibility of our fiscal
stance that R160 billion has to be found for all our sakes,” said Mboweni.</p>



<p>The Minister further explained that macroeconomic policy would indicate that a rate cut would have been warranted to spur economic growth. The corporate tax rate remains unchanged at 28 percent and excise duties will be going up in line with inflation and Mboweni hinted that a corporate rate cut could be on the cards if the government can get its ducks in a row.</p>


#Budget2020

What the 2020/21 budget means for Rwanda’s private sector

Cosatu vs Mboweni over 2020 budget cuts

#Budget2020: South Africans get a tax break; public-sector wage bill cut

#Budget2020: SA’s Finance Minister Tito Mboweni’s full speech

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#Budget2020

What the 2020/21 budget means for Rwanda’s private sector

Cosatu vs Mboweni over 2020 budget cuts

#Budget2020: South Africans get a tax break; public-sector wage bill cut

#Budget2020: SA’s Finance Minister Tito Mboweni’s full speech

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