National Budget Unit Ministry of Finance and Economic Planning Rwanda The Rwandan Budget National Budget Unit Ministry of Finance and Economic Planning Rwanda

Overview Legal Framework Constitution Organic Budget Law Financial Regulations Annual Budgeting Cycle Preparation & Execution Accounting & Audit Districts Institutions, Roles and Responsibilities National Budget Unit Departments of MINECOFIN Line Ministries Cabinet/Parliament

The Legal Framework There are 3 main legislative documents which direct the annual budget cycle Constitution of the Republic of Rwanda Organic Law on State Finances and Property Financial Regulations (ministerial order)

THE LEGAL FRAMEWORK CONSTITUTION OF THE REPUBLIC OF RWANDA Adopted in 2003 Establishes a bi-cameral legislature Provides for key annual activities of the legislature Submission of draft Finance Law to Cabinet Adoption of Finance Law by Parliament Submission of budget execution report to Parliament. ORGANIC LAW ON STATE FINANCES AND PROPERTY (OBL) Adopted in 2006 Establishes the principles of planning, budgeting and monitoring of state resources and management of state budget. FINANCIAL REGULATIONS Published in 2007 The Financial Regulations gives further ministerial instructions regarding the budget calendar, expenditure categorization, reallocations and accounting standards.

The Annual Budget Cycle The National Budget Cycle can be broken down as follows: Preparation National Priorities National MTEF Agency Budget and MTEF Finance Law Other aspects Budget Execution & SmartGov Auditing & Accounting District Budget Cycle Ongoing Budget Reforms

Step 1: National Priorities Months 3-4 of the fiscal year constitute the review period where the previous year’s performance is assessed and national priorities are set for the coming year Level Activity National (MINECOFIN) Macroeconomic Review & medium term projections EDPRS annual progress report Sectors Joint Sector Review Report on Annual Action Plan & Budget Execution Districts Report on imihigo Joint District Review Development Partners Joint Budget Support and PFM review Proceeding this, DPs make tentative commitments for the following year Cabinet/Parliament Akagera Retreat where national priorities for the coming year are decided.

Macro Framework Projections Step 2: National MTEF In month 5 of the fiscal year, the National Medium Term Expenditure Framework is established by National Budget Unit of MINECOFIN. The Macroeconomic Framework for the medium term is determined by the Macro Unit of MINECOFIN. This incorporates the tentative donor commitments for budget support and project aid. The National Priorities are used to produce initial sector ceilings which are consistent with the Macroeconomic Framework. National Priorities Macro Framework Projections National MTEF

Step 2: National MTEF The Budget Call Circular is prepared by National Budget Unit (NBU) which includes Initial budget ceilings per agency Formats to be submitted by each budget agency to assist preparation of the Finance Law Externally and internally financed projects Internally generated revenues Earmarked transfers to districts Agency MTEFs Strategic Issues Papers (SIPs) Budget calendar Change in fiscal year to that of EAC member states

Step 3: Agency Budget and MTEF In month 7, SIPs and Agency MTEFs are prepared by line ministries after consultation with their affiliated agencies, projects and districts. At this stage, information is gathered regarding projects support and sector budget support. The SIPs and agency MTEFs are submitted to MINECOFIN and analyzed by NBU. Budget consultations are then held between line ministries and MINECOFIN to agree on final ceilings to submit to Cabinet & Parliament.

Step 4: Finance Law In months 8-9, detailed draft budget is prepared by MINECOFIN along with accompanying Budget Framework Paper The BFP sets out the macroeconomic context of the draft budget as well as the key policy choices underlying the proposed resource allocation. The BFP is discussed by Cabinet and recommendations are incorporated. The BFP and draft Budget is discussed with donors at the second Joint Budget Support Review. It is at this point that Development Partners make firm commitments for the coming year. The draft Finance Law is submitted to Cabinet for approval before discussion by the Chamber of Deputies in months 10- 12. The Finance Law is ordinarily voted and approved by Parliament by 15th of month 12 of the fiscal year.

BUDGET EXECUTION AND SMARTGOV The budget is executed on the basis of the Finance Law, the Action Plan’s of budget agencies and cash flow plans Cash Flow plans permit spending on a quarterly basis. SmartGov is the single Integrated Financial Management Information System used throughout government for budget execution. During budget preparation, budget data is entered into SmartGov During execution, spending commitments are recorded in SmartGov to track execution. A separate accounting module is currently used but a fully integrated system is to be put in place in the coming months.

Auditing & Accounting The Accountant General produces, on a monthly basis, statements of revenue & expenditure, financial position, budget execution and bank reconciliation statement. OBL provides for consolidated Public Accounts to be produced by the 3rd month of the new fiscal year. The Auditor General has then to submit its report to Chamber of Deputies by the 6th month of the new financial year. In reality, the current focus is on financial performance but there is a need to improve on monthly and annual reporting on physical performance.

District Budget Cycle Intergovernmental Fiscal Relations Unit (IGFR) in MINECOFIN acts as the coordinating unit between the district and national budget cycle. Districts carry out their own review of last year’s performance which is discussed at the Joint Action Forum in month 2. During budget preparation, districts participate in consultations with line ministries on Earmarked Transfers. MINECOFIN (IGFR) send out the District Budget Call Circular for Districts to prepare their budgets. Following the finalization of the BFP at the national level, districts can prepare their detailed budget based on final resource envelopes in discussion with the districts’ Joint Action Forum. District budget is approved by District Councils

Ongoing Budget Reforms Improving the quality of budget execution reports (including externally financed projects) Gender Budgeting Improving the quality of the MTEF through improving the planning & budgeting process Aligning the fiscal year to those of EAC member states Developing a roadmap for moving towards GFS 2001 compliant classification for budgeting and accounting.

Institutions, Roles and Responsibilities Departments of MINECOFIN Line Ministries Cabinet & Parliament

Responsibilities of the National Budget Unit Budget Preparation Prepare national MTEF and Budget Call Circular Train budget agencies in Budget preparation Analyze Strategic Issues Papers and agency MTEFs Organise budget consultations Participate in drafting the Budget Framework Paper Prepare the draft Finance Law for Cabinet and Parliament Budget Execution Support budget agencies during budget execution Prepare monthly, quarterly, biannual and annual budget execution reports Participate in Joint Budget Support Reviews

MINECOFIN Unit Responsibilities in the Budget Cycle Macroeconomic Produce the macroeconomic framework Produce quarterly & annual macroeconomic report Update macroeconomic framework during the year Development Planning Support sectors with their Joint Sector Reviews Support district in producing District Development Plans & annual reviews Produce the EDPRS annual report Intergovernmental Fiscal Transfers Support districts in budget preparation Support to line ministries with transfers to districts Consolidation of district budgets and budget execution Treasury Monitor cash plans Verify & transmit payment order to BNR after verification Monitors debt and interest payments Public Accounts Production of financial statements including reporting on the execution of the budget External Finance Managing the DAD (development assistance database) Coordinating Joint Budget Support Reviews CEPEX Produce quarterly reports on project implementation Budgetmaster project manager Long term improvements to IFMIS system Routine support to users of Budgetmaster (SmartGov)

Line Ministries The Chief Budget Manager of each budget agency has the following reponsbilities: Preparing the consolidated annual budget and agency MTEF for the ministry and all affiliated budget agencies and projects Monitor the execution of the budget agency Maintain books of accounts and other records Prepare all budget execution reports Prepare, maintain and coordinate the use of financial plans, and managing revenues and expenditure Manage effectively & transparently the resources allocated to the agency

Cabinet & Parliament Cabinet Parliament Approves the Budget Framework Paper and suggest changes Approves the draft Finance Law before submission to the Parliament Parliament Debates the draft Finance Law in the final 3 months of the fiscal year Also discusses the report on implementation of last year’s budget from the Office of the Auditor General Votes and approve the Finance Law, ordinarly before the fiscal year begins.

Thankyou for your attention.